National Consumer Tribunal Annual Report 2011/12 National Consumer Tribunal 2011-12 | Page 88

Annual Financial Statements
ACCOUNTING POLICIES
for the year ended 31 March 2011
1.14 Impairment of tangible and intangible assets
At each reporting date, the National Consumer Tribunal reviews the carrying amounts of
its tangible and intangible assets to determine whether there is any indication that those
assets may be impaired. An asset is impaired when its recoverable amount is less than its
carrying value. In this instance the carrying value of the asset is reduced to its recoverable
amount. This reduction is an impairment loss, which is recognised immediately in surplus
or deficit. A reversal of an impairment loss of assets other than goodwill is recognised
immediately in surplus or deficit.
1.15 Inventories
Inventories are initially recognised at cost. Cost generally refers to the purchase price, plus
taxes, transport costs and any other costs in bringing the inventories to their current location
and condition. Where inventory is acquired by the entity for no or nominal consideration
(i.e. a non-exchange transaction), the cost is deemed to be equal to the fair value of the
item on the date acquired. The carrying amount of inventories is recognised as an expense
in the period that the inventory was distributed or consumed.
Inventories, consisting of consumable stores are measured at the lower of cost and current
replacement cost.
1.16 Financial Instruments
Initial recognition
The Tribunal classifies financial instruments, or their component parts, on initial recognition
as a financial asset, a financial liability or an equity instrument in accordance with the
substance of the contractual arrangement. Financial assets and financial liabilities are
recognised on the Tribunal’s statement of financial position when the Tribunal becomes
party to the contractual provisions of the instrument.
1.17 Financial assets
Financial assets are initially measured at fair value plus transaction costs. Financial
instruments are measured through profit or loss at fair value. The Tribunal’s principal
financial assets are trade and other receivables, and cash and cash equivalents. These
financial assets are classified as loans and receivables.
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. This category includes short-term
receivables, such as receivables, as well as cash and cash equivalents.
Loans and receivables are initially measured at fair value, plus transaction costs.
Subsequently, items included in this category are measured at the amortised cost, calculated
based on the effective interest method, and interest income is included in profit or loss for
the year. Net gains or losses represent reversals of impairment losses, impairment losses,
and gains and losses on derecognition. Net gains or losses are included in “other income”
or “other expenses”.
Short-term receivables w