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Notes to the Financial Statements

For the year ended 30 June 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

s) Income tax (continued)

ax consolidation (continued)

The Consolidated Entity has applied the group allocation approach in determining the appropriate amount of current taxes and deferred taxes to allocate to the members of the Tax Consolidated Group.

In addition to its own current and deferred tax amounts, AVJennings Properties Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the Tax Consolidated Group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the Group.

t) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

  • when the GST incurred on purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

  • receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Balance Sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part

of operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

u) Derivative financial instruments

The Consolidated Entity uses interest rate swaps and caps to hedge its risk associated with interest rate fluctuations. In accordance with treasury policy, the Consolidated Entity does not hold or issue derivative financial instruments for trading purposes.

36 AVJennings Limited ABN 44 004 327 771

Derivative financial instruments are initially recognised at fair value on the date on which the derivative contract is entered and subsequently marked-to-market at each reporting date.

Derivatives entered into to reduce exposures to fluctuations in floating interest rates may be accounted for as cash flow hedges provided the hedge designation, documentation and effectiveness tests can be met. To the extent that the hedges do not qualify for hedge accounting, gains or losses from changes in fair value are recognised in profit or loss.

v) rade and other payables

Trade and other payables represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 to 60 days of recognition.

w) Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

  • costs of servicing equity (other than dividends);

  • the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

  • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

x) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

reasury shares

The Company’s own equity instruments, which are reacquired for later use in employee share-based payment arrangements, are deducted from equity. No gain or loss is recognised in profit or loss for the purchase, sale, issue or cancellation of the Company’s own equity instruments.

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