Australia Post Annual Report 2008–09

Where settlement of any part of the
consideration is deferred, the amounts payable
in the future are discounted to their present
value as at the date of exchange. The discount
rate used is the entity’s incremental borrowing
rate, being the rate at which a similar
borrowing could be obtained from an
independent financier under comparable
terms and conditions.
(f) Revenue recognition
Revenue is recognised and measured at the
fair value of the consideration received or
receivable to the extent it is probable that the
economic benefits will flow to the group and
the revenue can be reliably measured. The
following specific recognition criteria must
also be met before revenue is recognised.
(i) Sale of goods and services
Revenue is recognised when the significant
risks and rewards of ownership of the goods
have passed to the buyer and the costs
incurred or to be incurred in respect of the
transaction can be measured reliably. Risks
and rewards of ownership are considered
passed to the buyer at the time of delivery
of the goods to the customer. Recognition
is at point of sale in the case of postage items
and provision of agency services, and at point
of lodgement in the case of bulk mail and
when control of goods has passed to the buyer
in the case of retail products. Allowance is
made for the assessed amount of revenue
from postage sales as at balance date
in respect of which service had not yet
been provided.
(ii) Interest revenue
Revenue is recognised as interest accrues
using the effective interest method. This is
a method of calculating the amortised cost
of a financial asset and allocating the interest
income over the relevant period using the
effective interest rate, which is the rate
that exactly discounts estimated future
cash receipts through the expected life
of the financial asset to the net carrying
amount of the financial asset.
(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) Segment reporting
A business segment is a distinguishable
component of the entity engaged
in providing products or services that are
subject to risks and returns that differ from
those of other operating business segments.
A geographical segment is a distinguishable
component of the entity that is engaged in
providing products or services within a
particular economic environment and is
subject to risks and returns that are different
from those of segments operating in other
economic environment.
(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 costs 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 income statement 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 income statement
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
uncollectable 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 with the present value of estimated
future cashflows, discounted at the original
effective interest rate.
Australia Post Annual Report 2008–09 | Financial and statutory reports 63