KU2020
4 . Critical accounting judgements and key sources of estimation uncertainty ( continued )
4.1 Employee entitlements Management judgement is applied in determining the following key assumptions used in the calculation of long service leave at balance date :
• future increases in wages and salaries ;
• future on-cost rates ; and
• experience of employee departures and period of service including future years in which long service leave is expected to be taken .
4.2 Leasehold improvements As described at 3 ( a ) above , the Company reviews the estimated useful lives of property , plant and equipment at the end of each reporting period .
4.3 Impairment In assessing impairment , the Company estimates the recoverable amount of each asset based on the depreciable replacement cost in accordance with AASB 136 Impairment of assets .
4.4 Impairment of trade and other receivables The Company has applied the simplified approach to measuring expected credit losses , which uses a lifetime expected loss allowance . To measure the expected credit losses , trade receivables have been grouped based on days overdue . The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument .
4.5 Make good provision Provisions for make good are included , where applicable , using the present value of anticipated costs for future restoration of leased premises . The provision includes future cost estimates associated with closure of the premises .
4.6 Revenue recognition To determine if a grant contract should be accounted for under AASB 1058 or AASB 15 , the Company has to determine if the contract is ‘ enforceable ’ and contains ‘ sufficiently specific ’ performance obligations . When assessing if the performance obligations are ‘ sufficiently specific ’, the Company has applied significant judgement in this regard by performing a detailed analysis of the terms and conditions contained in the grant contracts , review of accompanying documentation ( e . g . activity work plans ) and holding discussions with relevant parties .
Income recognition from grants received by the Company have been appropriately accounted for under AASB 1058 or AASB 15 based on the assessment performed .
Determining the timing of satisfaction of performance obligations ( and therefore whether to use an output or input method to recognise revenue over time ) requires particular judgement in the case of grant contracts not directly linked to enrolment numbers . In most cases the best measure of performance obligations being satisfied was determined to be the Input method . As such revenue is recognised on these types of contracts as costs are incurred as this was determined to be the most accurate measure of satisfaction of performance obligations .
4.7 Leases ( Company as a lessee )
Concessionary leases The Company leases various buildings from local councils with significantly below-market terms and conditions principally to enable it to further its objectives .
The Company is dependent on these leases to further its objectives as it utilises the buildings to run its operations to deliver its services . The lease terms range from 1 year and the lease payments range from $ 100 payable annually .
As outlined in the Company ’ s accounting policy in Note 3g , the Company has elected to measure these leases at cost .
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