2009-10 Annual Report - Australia Post

(iii) dividends
revenue is recognised when the group’s right to receive the payment
is established.
(iv) rental income
rental income from investment properties is accounted for on a
straight-line basis over the lease term. contingent rental income
is recognised as income in the periods in which it is earned. lease
incentives granted are recognised as an integral part of the total
rental income.
(g) operating segment
an operating segment is a component of an entity that engages in
business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other
components of the same entity), whose operating results are regularly
reviewed by the entity’s chief operating decision maker to make
decisions about resources to be allocated to the segment and assess
its performance and for which discrete financial information is available.
Management will also consider other factors in determining operating
segments, such as the level of segment information presented to the
board of directors.
operating segments have been identified based on the information
provided to the chief operating decision-makers – being the executive
management team.
operating segments that meet the quantitative criteria as prescribed
by aasB 8 are reported separately. information about other business
activities and operating segments that are below the quantitative
criteria are combined and disclosed in a separate category as an
“unallocated” segment.
(h) Government grants
Government grants are recognised when there is reasonable assurance
that the grant will be received and all attaching conditions will be
complied with. When the grant relates to an expense item, it is
recognised as income over the periods necessary to match the grant
on a systematic basis to the costs that it is intended to compensate.
the grants are not credited directly to shareholders’ equity. When the
grant relates to an asset, the fair value is credited to a deferred income
account and is released to the statement of comprehensive income over
the expected useful life of the relevant asset by equal annual instalments.
(i) leases
the determination of whether an arrangement is or contains a lease
is based on the substance of the arrangement. it also requires an
assessment of whether the fulfilment of the arrangement is dependent
on the use of a specific asset or assets and the arrangement conveys
a right to use the asset.
(i) Group as a lessee
Finance leases, which transfer to the group substantially all the risks
and benefits incidental to ownership of the leased item, are capitalised
at the inception of the lease at the fair value of the leased property
or, if lower, at the present value of the minimum lease payments. lease
payments are apportioned between the finance charges and reduction
of the lease liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recognised as
an expense in profit or loss.
capitalised leased assets are depreciated over the shorter of the
estimated useful life of the asset and the lease term if there is no
reasonable certainty that the group will obtain ownership by the
end of the lease term.
operating lease payments are recognised as an expense in the
statement of comprehensive income on a straight-line basis over
the lease term. operating lease incentives are recognised as a liability
when received and subsequently reduced by allocating lease payments
between rental expenditure and reduction of the liability.
(ii) Group as a lessor
leases in which the group retains substantially all the risks and benefits
of ownership of the leased asset are classified as operating leases.
initial direct costs incurred in negotiating an operating lease are added
to the carrying amount of the leased asset and recognised as an
expense over the lease term on the same basis as rental income.
(j) Cash and cash equivalents
cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term deposits with an original maturity of three
months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value. For the
purposes of the cashflow statement, cash and cash equivalents consist
of cash and cash equivalents as defined above, net of any outstanding
bank overdrafts. Bank overdrafts are included within interest-bearing
liabilities in current liabilities on the balance sheet.
(k) trade and other receivables
trade receivables, which generally have 30–90 day terms, are
recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less an allowance
for impairment. other receivables are initially recorded at the fair
value of the amounts to be received and are subsequently measured
at amortised cost.
collectability of trade receivables is reviewed on an ongoing basis at an
operating unit level. individual debts that are known to be uncollectible
are written off when identified. an impairment provision is recognised
when there is objective evidence that the group will not be able
to collect the receivable. Financial difficulties of the debtor, default
payments or outstanding debts more than 60 days overdue may
be considered objective evidence of impairment. the amount of the
impairment loss is the receivable carrying amount compared to the
present value of estimated future cashflows, discounted at the original
effective interest rate.
(l) inventories
inventories including raw materials, work in progress and finished
goods are valued at the lower of cost and net realisable value. costs
incurred in bringing each product to its present location and condition
are accounted for as follows:
• raw materials – purchase cost on a first-in, first-out basis. the cost
of purchase comprises the purchase price, including the transfer from
equity of gains and losses on qualifying cashflow hedges of purchases
of raw materials, import duties and other taxes (other than those
subsequently recoverable by the entity from the taxing authorities),
transport, handling and other costs directly attributable to the
acquisition or raw materials. Volume discounts and rebates are
included in determining the cost of purchase; and
• finished goods and work-in-progress – cost of direct materials and
labour and a proportion of variable and fixed manufacturing overheads
based on normal operating capacity. costs are assigned on the basis
of weighted average costs.
net realisable value is the estimated selling price in the ordinary course
of business, less estimated costs of completion and the estimated costs
necessary to make the sale.
AustrAliA Post AnnuAl rePort 2009–10 | Financial and statutory reports 51