h) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits. Cash equivalents are short-term,
highly liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
i) Trade and other receivables
Trade receivables, which comprise amounts due from services provided, are recognised and carried at original
invoice amount less an allowance for uncollectible amounts. Normal terms of settlement are 7 days. The
carrying amount of the receivable is deemed to reflect fair value.
An allowance for doubtful debts is made when there is objective evidence that the company will not be able to
collect the debts. Bad debts are written off when identified.
j) Income tax
The company is exempt from income tax under s50-5 of the Income Tax Assessment Act, as it is an income tax
exempt charitable entity. As a consequence, there is no income tax attributable to the operating result.
k) General funds and reserves
General Funds
The general funds represent the funds of the Company that are not designated for particular purposes.
Fundraising Reserve
The fundraising reserve arises from the accumulated efforts of parents and staff to allow services to purchase
optional toys and equipment, to assist the service to expand and develop to meet local needs and to allow
parents to share in the life of the service and to make a concrete contribution to their children’s lives.
Available-for-sale Reserve
The Available-for-Sale Reserve arises on the revaluation of available-for-sale financial assets. Where a revalued
financial asset is sold that portion of the reserve which relates to that financial asset, and is effectively realised, is
recognised in profit or loss. Where a revalued financial asset is impaired that portion of the reserve which relates
to that financial asset is recognised in profit or loss.
l) Donations in kind
Over the course of the year the company has received donations in kind from a number of local councils in the
form of the right to use premises at discounted rent. The company is of the view that it is not feasible to fair
value the services received accurately and as such it has not brought to account discounted rent as a donation.
m) Trade and other payables
Trade payables and other payables represent liabilities for goods and services provided to the company prior to
the end of the financial year that are unpaid. These amounts are usually settled within 30 days. The carrying
amount of the creditors and payables is deemed to reflect fair value.
n) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can
be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where
a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is
the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received
and the amount of the receivable can be measured reliably.
o) Unearned income
The liability for unearned income is the unutilised amounts of grants received on the condition that specified
services are delivered or conditions are fulfilled. The services are usually provided or the conditions usually
fulfilled within 12 months of receipt of the grant. Where the amount received is in respect of services to be
provided over a period that exceeds 12 months after the reporting date or the conditions will only be satisfied
more than 12 months after the reporting date, the liability is discounted and presented as non-current.
Continues...
116th Annual Report 2011
29