KU Annual Report KU Annual Report 2019 | Page 42

FINANCIALS 2019 KU 20 19 2.1 Amendments to Accounting Standards that are mandatorily effective for the current reporting period (Continued) Donations Based on an analysis of the Company’s underlying arrangements for donations as at 1 January 2019, the Company has assessed that the adoption of the new income requirements do not have a significant impact on the amounts recognised in its financial statements as the majority of the donations do not meet the enforceability and the ‘sufficiently specific’ criteria under AASB 15 and would therefore be recognised as income once the Company controlled the relevant asset (assuming no other related amounts are applicable) under AASB 1058, which is in line with the current income recognition under AASB 1004. Capital grants In cases where the transaction includes a transfer to enable a Company to acquire or construct a recognisable non-financial asset to be controlled by the Company, AASB 1058 requires the Company to recognise a liability for the excess of the fair value of the transfer over any related amounts recognised and recognises income as it satisfies its obligations under the transfer. Based on an analysis of the capital grant contracts as at 1 January 2019, the Company has concluded that the capital grants had been recognised as income in the comparative year as the Company had already satisfied its obligations under the transfer. As such the Company has determined that there is no material impact on timing of recognition of capital grants of transitioning to AASB 1058 and AASB 15. Parent fees Based on an analysis of the Company’s contracts relating to the receipt of parent fees at 1 January 2019, the Company has concluded that parent fees should be recognised as income in line with enrolment attendance at centres throughout the year. Financial statement impacts The Company’s accounting policies for its revenue streams are disclosed in detail in Note 3 below. Apart from providing more extensive disclosures for the Company’s revenue transactions, the application of AASB 15 and AASB 1058 has not had an impact on the financial position and/or financial performance of the Company. AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities In the current year, the Company has applied AASB 2018-8 which is effective for an annual period that begins on or after 1 January 2019. Leases at significantly below-market terms and conditions (concessionary leases) For Not-for-Profit Entities with leases that have significantly below-market terms and conditions principally to enable the Company to further its objectives (commonly known as concessionary leases or peppercorn leases), AASB 1058 and AASB 16 requires Not-for-Profit Entities to measure right-ofuse assets at initial recognition at fair value (based on AASB 13), the lease liability per AASB 16 and the difference to be accounted as income upfront. AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities provides a temporary option for Not-for-Profit lessees to elect to measure a class (or classes) of right-of-use assets arising under ‘concessionary leases’ at initial recognition, at either fair value or cost. The Company has conducted an analysis of the lease arrangements and notes that some of its leases are at-market and some are at significantly below-market terms and conditions (concessionary leases). For the at-market leases, these will be accounted for under AASB 16. For the concessionary leases, the Company has decided to make use of the temporary option under AASB 2018-8 to measure the right-of-use assets at cost on initial recognition. As the amount of the concessionary lease payments are immaterial, the Company does not expect a significant impact on its financial statements arising from the adoption of the cost option for concessionary leases. 16