FINANCIALS
4. Critical accounting judgements and
key sources of estimation uncertainty
The preparation of financial statements requires
management to make judgements, estimates and
assumptions that affect the application of policies
and reported amounts of assets, liabilities, income
and expenses. The estimates and associated
assumptions are based on historical experience
and other various factors that are believed to be
reasonable under the circumstances, the results of
which form the basis of making the judgements.
Actual results may differ from these estimates.
o) 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.
The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period
in which the estimate is revised if the revision affects
only that period or in the period of the revision and
future periods if the revision affects both current and
future periods.
p) 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 following are the critical judgements that
management has made in the process of applying
the Company’s accounting policies and that have the
most significant effect on the amounts recognised in
the consolidated financial statements:
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.
4.1 Employee entitlements
Management judgement is applied in determining
the following key assumptions used in the calculation
of long service leave at balance date:
• future increases in wages and salaries;
• future on-cost rates; and
• experience of employee departures and period of
service including future years in which long service
leave is expected to be taken.
4.2 Leasehold improvements
As described at 3(a) above, the Company reviews
the estimated useful lives of property, plant and
equipment at the end of each reporting period.
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.
q) 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.
4.3 Impairment
In assessing impairment, the Company estimates
the recoverable amount of each asset based on the
depreciable replacement cost in accordance with
AASB 136 “Impairment of assets”.
4.4 Make good provision
Provisions for make good are included, where
applicable, using the present value of anticipated
costs for future restoration of leased premises. The
provision includes future cost estimates associated
with closure of the premises.
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