Port Hedland Port Authority Annual Report 2011 - Parliament of ...

Other leases are operating leases and the leased assets are not recognised on the Authority’s
Statement of Financial Position.
Payments made under operating leases are recognised in profit or loss on a straight line basis over
the term of the lease. Lease incentives received are recognised as an integral part of the total
lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance
expense and the reduction of the outstanding liability. The finance expense is allocated to each
period during the lease term so as to produce a constant periodic rate of interest on the
remaining balance of the liability. Contingent lease payments are accounted for by revising the
minimum lease payments over the remaining term of the lease when the lease adjustment is
confirmed.
(h)
Financial instruments
In addition to cash, the Authority has three categories of financial instruments:
• Loans and receivables;
• Held to maturity investments; and
• Financial liabilities measured at amortised cost.
Refer to Note 20 for further information on the classification of financial instruments.
Initial recognition and measurement is at fair value. The transaction cost or face value is
equivalent to the fair value. Subsequent measurement is at amortised cost using the effective
interest method.
The fair value of short-term receivables and payables is the transaction cost or the face value
because there is no interest rate applicable and subsequent measurement is not required as the
effect of discounting is not material.
(i)
Payables
Payables, including trade creditors, amounts payable and accrued expenses, are recognised for
amounts to be paid in the future for goods and services received prior to the reporting date. The
carrying amount is equivalent to fair value, as they are generally settled within 30 days.
(j)
Borrowing Costs
Borrowing costs are expensed as incurred.
(k)
Employee benefits
The liability for annual and long service leave expected to be settled within 12 months after the
Statement of Financial Position date is recognised and measured at the undiscounted amounts
expected to be paid when the liabilities are settled. Annual and long service leave expected to be
settled more than 12 months after the Statement of Financial Position date is measured at the
present value of amounts expected to be paid when the liabilities are settled. Leave liabilities are
in respect of services provided by employees up to the Statement of Financial Position date.
When assessing expected future payments, consideration is given to expected future wage and
salary levels, including non-salary components, such as employer superannuation contributions.
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