Annual Report - Campus Living Villages

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1 8 Campus Living Villages Annual Report 09/10 Campus Living Villages Fund NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 A$’000 FUND Non-Australian tax entities The Fund has subsidiaries in the United States of America (“US”), New Zealand (“NZ”) and the United Kingdom (“UK”), which do not form part of the tax consolidation group and comply with tax legislation in those countries. The US property business is a Real Estate Investment Trust (“REIT”) and the taxable income of the business is taxed in the hands of the partners of the REIT. h) Leases Leases of property, plant and equipment where the Fund, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease term. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Fund’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Fund’s share of the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in the Statement of Comprehensive Income, but only after a reassessment of the identification and measurement of the net assets acquired. Where settlement of any part of cash 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. Application of AASB 1002 The investors of the Fund purchased units in each trust which cannot be traded independently. The trusts do not have an ownership in each other and have been brought together as part of the fund in term of a contractual arrangement of the Fund. Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Fund as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Comprehensive Income on a straight line basis over the period of the lease. i) Business combinations The purchase method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, equity instruments issued or liabilities incurred or assumed at the date of exchange. Where equity instruments are issued in an acquisition, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity. The stapling of the four trusts is also excluded from the scope of AASB 3 Business Combinations as the stapling arrangement is a business combination in which separate entities or businesses have been brought together to form a reporting entity by contract alone without obtaining an interest. Identification of the acquirer The acquirer in a business combination must be identified. The acquirer is the combining entity that obtains control of the other combining entities or businesses. Control is the power to govern the financial and operating policies of an entity or business so as to obtain benefits from its activities. In the event that the acquirer identified is not the legal parent of the business combination, the issued capital of the Fund reflects the issued capital of the acquirer amended for the appropriate fair value adjustments of the business. j) Impairment of assets Goodwill is not subject to amortisation and is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
Campus Living Villages Annual Report 09/10 1 9 Campus Living Villages Fund NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2010 A$’000 The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or Fund’s assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. m) Other financial assets Classification The Fund classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and availablefor-sale financial assets. The classification depends on the purpose for which the investments were acquired. FUND k) Cash and cash equivalents For cash flow statement presentation purposes, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities 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, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. l) Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of trade receivables is established when there is objective evidence that the Fund will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor and default or delinquency in payments more than 30 days overdue are considered indicators that the trade receivable is impaired. The amount of the provision on impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision on impairment is recognised in the Statement of Comprehensive Income in other expenses. When a trade receivable for which an impairment has been recognised becomes uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against other expenses in the Statement of Comprehensive Income. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to maturity, re-evaluates this designation at each reporting date. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in trade and other receivables, other current assets, receivables and other non-current assets in the balance sheet. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Fund’s management has the intention and ability to hold to maturity. If the Fund was to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as availablefor-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets. Available-for-sale Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.
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Annual Report - Campus Living Villages

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