FINANCIALS 2019
h) Revenue recognition
The Company recognises income from its main
revenue/income streams, as listed below:
• Government grants
• Donations
• Capital grants
• Parent fees
Government grants and donations
When the Company receives government
grants, donations and bequests that are in the
scope of AASB 1058 (being a transaction where
the consideration paid to acquire an asset is
significantly less than fair value principally to
enable the Company to further its objectives),
it performs an assessment to determine if the
contract is ‘enforceable’ and contains ‘sufficiently
specific’ performance obligations.
In cases where there is an ‘enforceable’ contract with
a customer with ‘sufficiently specific’ performance
obligations, the transaction is accounted for under
AASB 15 where income is recognised when (or as)
the performance obligations are satisfied.
In all other cases (where the contract is not
‘enforceable’ or the performance obligations are not
‘sufficiently specific’), the transaction is accounted for
under AASB 1058 where the Company:
• Recognises the asset in accordance with the
requirements of other relevant applicable
Australian Accounting Standards (e.g. AASB 9,
AASB 16, AASB 116 and AASB 138).
• Considers whether any other financial statement
elements should be recognised (‘related amounts’)
in accordance with the relevant applicable
Australian Accounting Standard including:
− contributions by owners (AASB 1004)
− a lease liability (AASB 16)
− a financial instrument (AASB 9)
− a provision (AASB 137)
• Recognises income immediately in profit or loss
for the excess of the initial carrying amount of
the asset over any related amounts recognised.
Capital grants
For capital grants received under an enforceable
agreement where it includes a transfer to
enable the Company to acquire or construct a
recognisable non-financial asset to identified
specifications which will be controlled by the
Company when completed, the Company
recognises 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.
i) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand
and demand deposits. Cash equivalents are shortterm,
highly liquid investments that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in 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.
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.
l) General funds and reserves
General Funds
The general funds represent the retained earnings
of the Company that are not designated for
particular purposes.
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.
KU
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