KU Annual Report KU Annual Report 2019 | Page 39

FINANCIALS 2019 Notes to the Financial Statements for the Financial Year Ended 31 December 2019 1. Corporate Information The financial statements of KU Children’s Services (the Company) for the year ended 31 December 2019 were authorised for issue in accordance with a resolution of the Directors on 31 March 2020. The Company is incorporated as a company limited by guarantee. The financial statements are presented in Australian dollars, which is KU Children’s Services’ functional and presentation currency. 2. Application of new and revised Australian Accounting Standards 2.1 Amendments to Accounting Standards that are mandatorily effective for the current reporting period The Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for an accounting period that begins on or after 1 January 2019. New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Company include: • AASB 16 Leases • AASB 15 Revenue from Contracts with Customers (AASB 15) • AASB 1058 Income of Not-for-Profit Entities (AASB 1058) • AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities (AASB 2016-8) • AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Notfor-Profit Entities (AASB 2018-8) Impact of initial application of AASB 16 Leases In the current year, the Company has applied AASB 16 that is effective for annual periods that begin on or after 1 January 2019. AASB 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changesto lessee accounting by removing the distinction between operating and finance lease and requiring the recognition of a right-of-use asset and a lease liability at commencement for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. Details of these new requirements are described in Note 3. The date of initial application of AASB 16 for the Company is 1 January 2019. The Company has applied AASB 16 using the cumulative catch up approach, with no restatement of the comparative information the difference between Right-of-Use Assets and Lease Liability at date of initial adoption on 1 January 2019 was to opening retained earnings. a) Impact of the new definition of a lease The Company has made use of the practical expedient available on transition to AASB 16 not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with AASB 17 will continue to be applied to those contracts entered or modified before 1 January 2019. The change in definition of a lease mainly relates to the concept of control. AASB 16 determines whether a contract contains a lease on the basis of whether the customer has the right to control the use of an identified asset for a period of time in exchange for consideration. This is in contrast to the focus on ‘risks and rewards’ in AASB 17. The Company applies the definition of a lease and related guidance set out in AASB 16 to all contracts entered into or changed on or after 1 January 2019. Management has assessed that the new definition in AASB 16 will not significantly change the scope of contracts that meet the definition of a lease for the Company. KU 20 19 13