2013 Apr 15 Annual Report 2012 - Phosphagenics

Notes to the consolidated fi nancial statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(q) Inventories
Inventories including raw materials, work in progress and fi nished goods are valued at the lower of cost
and net realisable value. Costs incurred in bringing each product to its present location and conditions
are accounted for as follows:
Raw materials
Purchase cost on a fi rst-in, fi rst-out basis. The cost of purchase comprises the purchase price including,
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 of raw materials.
Volume discounts and rebates are included in determining the cost of purchase.
Finished goods and work-in-progress
Cost of direct materials, labour and a proportion of variable and fi xed manufacturing overheads based
on normal operating capacity.
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.
(r) Trade and other receivables
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Trade receivables, which generally have thirty to sixty day terms, are recognised initially at fair value
and subsequently measured at amortised cost using the effective interest method, less an allowance
for impairment.
Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be
uncollectible are written off when identifi ed. An impairment provision is recognised when there is objective
evidence that the Group will not be able to collect the receivable. Financial diffi culties of the debtor, default
payments or debts more than ninety days overdue are considered objective evidence of impairment.
The amount of the impairment loss is the receivable carrying amount compared to the present value
of estimated future cash fl ows, discounted at the original effective interest rate.
(s) Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses. Depreciation is calculated on a diminishing value basis as follows:
Computer Equipment – 33% p.a.
Plant and equipment – 20% p.a.
Offi ce Equipment - 20% p.a.
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted
if appropriate, at each reporting period. When no future economic benefi ts are expected to arise from
the continued use of an item of property, plant and equipment, it is derecognised. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the item) is included in the statement of comprehensive income in the year the item
is derecognised.
PHOSPHAGENICS ANNUAL REPORT 2012