ii) Lease liabilities
At the commencement date of the lease, the group recognises lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the group and payments of penalties for terminating the lease, if the lease term
reflects the group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are
recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the group uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease
term, a change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to
determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
iii) Short-term leases and leases of low-value assets
The group applies the short-term lease recognition exemption to its short-term leases of land and buildings and plant and
equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain
a purchase option). It also applies the lease of low-value assets recognition exemption to leases of land and buildings and
plant and equipment that are considered to be low value. Lease payments on short-term leases and leases of low value
assets are recognised as expense on a straight-line basis over the lease term.
2.7 INVENTORY
Inventory represents assets held for resale in the normal course of business, to produce assets for sale, or for use in production
processes, or the rendering of services. Included in cost of inventory are the cost price, production costs and any costs incurred
in bringing the inventory to its current position and condition, ready for the intended purpose. Cost of inventory does not
include interest, which is accounted for as an expense in the period when incurred.
Included in cost of production are costs directly attributable to units produced, direct costs such as direct wages and salaries,
variable overheads, as well as the systematic allocation of fixed production overheads based on the normal capacity of the
production facility.
Cost of inventory items are determined in accordance with the weighted average cost method, unless it is more appropriate
to apply another basis on account of the characteristics, nature and use of the inventory. Cost of inventory is determined as
follows:
Merchandise and consumables
Mechanisation whole goods
Grain commodities
- Weighted average cost price
- Purchase price
- At fair value
Inventory is valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the normal
course of business, less estimated costs necessary to conclude the sale.
2.8 INVENTORY HELD TO SATISFY FIRM SALES
Inventory held to satisfy firm sales represent inventory purchases on behalf of third parties in respect of agricultural produce
received from producers, which are payable by the third party on delivery of such agricultural produce to them. This includes
sales in terms of sales contracts secured by inventory. Refer to note 12 for measurement.
2.9 TAXES
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted, at the reporting date in the countries where the group operates and generates taxable income.
Current income tax shall be recognised outside profit and loss if the tax relates to items, in the same or different period,
outside profit or loss. Therefore if items are recognised in other comprehensive income the current tax should be recognised
in other comprehensive income and if items are recognised directly in equity the current tax should be recognised directly
in equity.
Senwesbel Limited Reg no: 1996/017629/06 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2020 92