annual report/2006 - University of Melbourne

financial statements/
Notes to and forming part of the Financial Statements
Note 1 Statement of Significant Accounting Policies (Continued)
1.4 Income Recognition
Income is measured at the fair value of the consideration received or receivable. Income is recognised for the major business
activities as follows:
(i) Government Financial Assistance
Government grants are recognised at their fair value when there is reasonable assurance that the grant will be received
and the Group has complied with the attached conditions. Such grants are treated as non-reciprocal transfers in accordance
with AASB 1004 Contributions.
Government grants which have outstanding performance or return conditions are recognised in accordance with AASB
118 Revenue with reference to the percentage of completion method. Australian Government Research Project income
is recognised in accordance with this standard. The stage of completion is measured by reference to total expenditure
incurred to date compared with the funding provided. The University regards the receipt of such income as a reciprocal
transfer as the University is required to provide the necessary services in return for grant funding. A liability is recognised
in the Balance Sheet in respect of Research Project Income which is unearned at the balance date. AASB 118 Revenue
requires revenue to be recognised in the reporting periods in which the services are rendered.
(ii) Fees and Charges
Fee for service revenue is recognised upon the delivery of the service. Where revenue of a reciprocal nature has been
clearly received in respect of programs or services to be delivered in the following year, such amounts are deferred and
disclosed as revenue in advance in accordance with AASB 118 Revenue.
(iii) Investment Income
Dividends are taken into income when the shares are declared ex dividend. Interest income is recognised on an accruals
basis taking into account the interest rates applicable to the financial assets.
(iv) Other
Income from the sale of goods is recognised upon the delivery of goods to customers.
Income in the form of endowments and bequests is brought to account as revenue when received.
All income is stated net of Goods and Services Tax (GST).
1.5 Income Taxation
The University of Melbourne and its subsidiaries, with the exception of Melbourne Ventures Pty Ltd and some of the wholly
owned subsidiaries of UMEE Ltd, are exempt from income tax pursuant to Part 50.1 of the Income Tax Assessment Act
1997. The overseas subsidiaries of UMEE Ltd are subject to income tax in the relevant tax jurisdictions.
Melbourne Ventures Pty Ltd and the wholly owned subsidiaries of UMEE Ltd adopt the balance sheet method of
tax-effect accounting.
1.6 Cash and Cash Equivalents
For the purpose of the Cash Flow Statement, cash and cash equivalents include cash on hand and at bank, at-call deposits and
bank bills with a maturity of 90 days or less.
1.7 Inventories
Annual stocktakes of inventories are undertaken at all locations.
Inventories comprising Finished Goods, Raw Materials, Work in Progress, Fodder and Hay stocks are measured at the lower of
cost and net realisable value, with adjustments made to take account of obsolescence.
The Group’s livestock, orchards and picked fruit are measured at their fair value less estimated point-of-sale costs in accordance
with AASB 141 Agriculture. The fair value of these items is determined based on market prices in the local area.
Costs are assigned to individual items of inventory on the basis of the first-in, first-out method.
1.8 Financial Instruments
AASB 139 Financial Instruments: Recognition and Measurement has four categories of financial instruments including: financial
assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial
assets. The classification depends on the purpose for which the investments were acquired. The classification of investments is
determined by management at initial recognition and is re-evaluated at each reporting date.
The University of Melbourne Annual Report 2006
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