FINANCIALS 2019
KU
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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.
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