Financial Statements to 31 July 2008 - Perth College - UHI ...

Perth College
Notes to the Accounts
1 Statement of Principal Accounting Policies (continued)
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Stocks
Stocks are items held for resale and are stated at the lower of their cost or
net realisable value. Where necessary provision is made for obsolete, slow
moving and defective stocks.
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Taxation
The College has been granted charitable status by the Inland Revenue.
Non-recoverable Value Added Tax arising from expenditure is charged to
the Income and Expenditure Account. Air Service Training (Engineering)
Ltd, a wholly owned subsidiary, is subject to Corporation Tax and VAT in the
same way as any other commercial organisation.
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Deferred Taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date, where transactions or
events that result in an obligation to pay more or a right to pay less tax in
the future have occurred by the balance sheet date with certain limited
exceptions.
Deferred tax is calculated on an undiscounted basis at the tax rates that are
expected to apply in the periods in which the timing differences are
expected to reverse, based on tax rates and laws enacted or substantively
enacted at the balance sheet date.
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Provisions
Provisions are recognised when the institution has a present legal or
constructive obligation as a result of a past event, it is probable that a
transfer of economic benefit will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. Where the
effect of the time value of money is significant, the estimated cash flows are
discounted using the discount rate prescribed by the Scottish Funding
Council.
Unfunded pensions are accounted for under FRS 12 as required by the
Accounts Direction issued by the Scottish Funding Council.
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Revaluation Reserve
Surpluses arising on the revaluation of the College's properties are
transferred to the revaluation reserve. Additional depreciation charged on
the revalued amount of these assets is transferred from revaluation reserve
to the Income and Expenditure Account together with any surplus of deficit
on disposal.
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