National Consumer Tribunal Annual Report 2011/12 National Consumer Tribunal 2011-12 | Page 89

ACCOUNTING POLICIES
for the year ended 31 March 2011
1.17 Financial assets (continued)
Impairment losses are recognised on loans and receivables when there is objective
evidence of impairment. An impairment loss is recognised in surplus or deficit when the
carrying amount of the asset exceeds its recoverable amount. The recoverable amount is
calculated as the present value of the estimated future cash flows discounted at the original
effective interest rate of the instrument.
1.18 Financial liabilities
The Tribunal’s principal financial liabilities are trade and other payables and are classified
as other liabilities.
Other financial liabilities are initially measured at fair value, plus transaction costs.
Subsequently, these items are measured at the amortised cost, using the effective interest
method. Interest expenses on these items are measured at the amortised cost, using the
effective interest method. Interest expenses on these items are recognised in surplus or
deficit for the year and they are included in “finance costs”. Net gains or losses represent
gains or losses on derecognition and they are included in “other income” or “other expense”.
1.19 Provisions
Provisions are recognised when the National Consumer Tribunal has a present obligation
as a result of a past event and it is probable that this will result in an outflow of economic
benefits that can be estimated reliably. Provision is made for leave pay is set at 100% of
all outstanding accumulated leave at reporting date.
1.20 Cash and cash equivalent
Cash and cash equivalents are measured at fair value.
1.21 Fruitless and wasteful expenditure
Fruitless expenditure means expenditure which was made in vain and would have been
avoided had reasonable care been exercised.
All expenditure relating to fruitless and wasteful expenditure is recognised as an expense
in the statement of financial performance in the year that the expenditure was incurred.
The expenditure is classified in accordance with the nature of the expense, and where
recovered, it is subsequently accounted for as revenue in the statement of financial
performance.
Annual Report 2011
national consumer tribunal | page 87