Annual Report - Campus Living Villages

1 2 0 Campus Living Villages Annual Report 09/10
Campus Living Overseas Trust
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
A$’000
CLOT
The fair value of financial instruments traded in active markets
(such as publicly traded derivatives, and trading and available
for- sale securities) is based on quoted market prices at the
balance sheet date. The quoted market price used for financial
assets held by the consolidated entity is the current bid price.
The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives)
is determined using valuation techniques. The consolidated
entity uses a variety of methods and makes assumptions
that are based on market conditions existing at each balance
date. Quoted market prices or dealer quotes for similar
instruments are used for long-term debt instruments held.
Other techniques, such as estimated discounted cash flows,
are used to determine fair value for the remaining financial
instruments. The fair value of interest rate swaps is calculated
as the present value of the estimated future cash flows. The
fair value of forward exchange contracts is determined using
forward exchange market rates at the balance sheet date.
The carrying value less impairment provision of trade
receivables and payables are assumed to approximate their
fair values due to their short-term nature. The fair value of
financial liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the current
market interest rate that is available to the consolidated
entity for similar financial instruments.
n) Property, plant and equipment
Property, plant and equipment is stated at historical cost
less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the consolidated entity and the cost
of the item can be measured reliably. The carrying amount
of any replaced part is derecognised. All other repairs and
maintenance are charged to the Statement of Comprehensive
Income during the reporting period in which they are incurred.
Land is not depreciated. Depreciation on other assets is
calculated using the straight-line method to allocate their cost
or revalued amounts, net of their residual values, over their
estimated useful lives, as follows:
Buildings
Vehicles
Furniture, fittings and equipment
Leasehold improvements
Leased plant and equipment
25-40 years
3-5 years
3-8 years
25-35 years
10-15 years
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the
statement of comprehensive income. When revalued assets
are sold, amounts included in other reserves in respect of
those assets are transferred to retained earnings.
o) Intangibles
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the consolidated entity’s share of the
net identifiable assets of the acquired subsidiary/associate
at the date of acquisition. Goodwill is not amortised. Instead,
goodwill is tested for impairment annually, or more frequently
if events or changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated impairment
losses. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. Each of those cash-generating units
represents the consolidated entity’s investment in each
country of operation by each primary reporting segment.
Management contracts
Management contracts acquired as part of a business
combination are recognised separately from goodwill. The
management contracts are carried at their fair value at
the date of acquisition less accumulated amortisation and
impairment losses. Amortisation of management contracts is
calculated based on the timing of projected cash flows of the
contracts over their estimated useful lives, which currently
vary from 20 to 30 years.
p) Trade and other payables
These amounts represent liabilities for goods and services
provided to the consolidated entity prior to the end of
financial year which are unpaid. The amounts are unsecured
and are usually paid within 30 days of recognition. Deferred
revenue represents income received in advance from students
at the beginning of the semester and is released to revenue
when the recognition criteria have been met.
q) Borrowings and borrowing costs
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in the statement of comprehensive
income over the period of the borrowings using the effective
interest method.
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each balance sheet date. An
asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.