FINANCIALS 2018
3. Summary of Accounting Policies
(continued)
h) Revenue (continued)
Government funding - capital
Funds are received from government departments
in accordance with contracts to undertake capital
works programs on behalf of the department. In
accordance with AASB 1004 Contributions, this
income is recognised upfront once control of the
funds or the commitment to receive funds has
been transferred.
KU
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l) General funds and reserves
General Funds
The general funds represent the retained earnings
of the Company that are not designated for
particular purposes.
Government Brokered Programs
Funds are received from Government Brokered
Programs by KU for the allocation to recipients
who provide a variety of early childhood education
and care programs in the community. The
funds received and allocated are recognised
in the Statement of Profit or Loss and Other
Comprehensive Income in accordance with AASB
118 Revenue. Cash flows are included in the
Statement of Cash Flows on a gross basis.
Fundraising Reserve
The fundraising reserve arises from the accumulated
surpluses generated as a result of the efforts of
parents and staff to allow services to purchase 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.
Program Reserve
The Program reserve arises from surpluses on
the programs that have been allocated to the
Company for future liabilities that may arise which
the Company will be accountable for.
Interest Revenue
Interest revenue is accrued on a time basis, by
reference to the principal outstanding and at
the effective interest rate applicable, which is the
rate that exactly discounts estimated future cash
receipts through the expected life of the financial
assets to that asset’s net carrying amount.
m) 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.
i) 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.
n) 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.
j) Term deposits
Term deposits comprise investment deposits held
with banks with short to medium term maturity
periods. The investments are measured at
amortised cost using the effective interest method,
less any impairment. Interest income is recognised
by applying the effective interest rate.
o) 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.
k) 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.
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