Download the Annual report 2011 - Unisa

UNISA ANNUAL REPORT 2011
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
2.8.2 Reversals of impairment
In respect of other non-financial assets, impairment losses recognised in prior periods are assessed at each
reporting date for any indications that the loss has decreased or no longer exists.
In respect of non-financial assets, an impairment loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
An impairment loss in respect of receivables carried at amortised cost is reversed if the subsequent increase in
recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.
The reversal of impairment losses on these financial assets is recognised in profit or loss.
2.9 FOREIGN CURRENCIES
The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional
currency at the beginning of the period, adjusted for effective interest and payments during the period, and the
amortised cost in foreign currency translated at the exchange rate at the end of the period.
Foreign currency transactions are translated to the University’s functional currency at the exchange rates prevailing
at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the
reporting date are translated to the functional currency at rates of exchange ruling at the end of the financial
year.
It is not the policy of the University to take out forward exchange contracts on foreign currency transactions
entered into.
2.10 LEASES
2.10.1 Finance leases
Leases of property, plant and equipment where the University obtains substantially all the risks and rewards
of ownership are classified as finance leases. Finance leases are capitalised. All other leases are classified as
operating leases. The classification is based on the substance and financial reality of the whole transaction
rather than the legal form. Leases of land and buildings are analysed separately to determine whether each
component is an operating or finance lease.
At the commencement of the lease term, finance leases are recognised as assets and liabilities in the statement
of financial position at an amount equal to the fair value of the leased asset or, if lower, the present value of the
minimum lease payments. Any direct costs incurred in negotiating or arranging a lease is added to the cost
of the asset. The discount rate used in calculating the present value of minimum lease payments is the rate
implicit in the lease.
Capitalised leased assets are accounted for as property, plant and equipment. They are depreciated using the
straight-line basis at rates considered appropriate to write off the depreciable amount over the estimated useful
lives. Where it is not certain that an asset will be taken over by the University at the end of the lease, the asset
is depreciated over the shorter of the lease period and the estimated useful life of the asset.
Finance lease payments are allocated between the lease finance cost and the capital repayment using the effective
interest method. Lease finance costs are charged to operating costs as they become due.
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