Annual Report 2007 - Publications Unit - The University of Western ...

THE UNIVERSITY OF WESTERN AUSTRALIA
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2007
1. Summary of significant accounting policies (continued)
Expenditure on research activities is recognised as an expense in the income statement when incurred. Expenditure on
development activities is expensed unless the outcome is technically and commercially feasible, resources are available
to complete the development and there is a commitment to complete the project.
Amortisation is calculated on a straight line basis over the estimated useful life of the asset. The useful life of software is
currently determined to be five years.
Impairment testing is performed when an indicator of impairment is identified.
(n)
Leases
Leases where the lessor has substantially all the risks and rewards of ownership are classified as finance leases.
Finance leases are capitalised at the lower of fair value and the present value of the minimum lease payments and the
corresponding obligation is recorded in payables. Each lease payment is allocated between the finance charge and
reducing the liability.
Leases are classified as operating leases when the lessor retains substantially all the risks and rewards of ownership.
Payments or income received under operating leases are recognised in the income statement on a straight line basis
over the lease term. Where the University is the lessor, the asset subject to an operating lease is recognised in the
balance sheet according to the nature of the asset.
(o)
Trade and other payables
Payables represent liabilities for goods or services incurred on or before reporting date.
(p)
Provisions
Provisions are recognised where there is a present obligation as a result of a past event, it is probable that an outflow of
economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount.
If the effect of the time value of money is material the provision will be discounted.
(q)
Employee benefits
(i)
Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave are recognised and measured as the amount unpaid at the
reporting date at expected value in respect of employees’ services up to that date.
(ii)
Long service leave
A liability for long service leave is recognised and measured as the present value of expected future payments
to be made in respect of services provided by employees up to the reporting date. Consideration is given to
expected future wage and salary levels, based on statistical data related to employee departures and periods of
service.
(iii)
Parental leave
A liability for parental leave is recognised based on the University’s present obligation to make future parental
leave payments in respect of services provided by employees up to the reporting date. The value of these future
payments incorporates expected future wage and salary levels, based on statistical data related to historical
employee parental leave and periods of service.
(iv)
Superannuation
The University contributes to a number of employee funds that exist to provide benefits for employees and their
dependants on retirement, disability or death. Three of these funds are defined benefit pension schemes.
Expenses incurred in relation to schemes accounted for as defined benefit schemes are determined using the
projected unit credit actuarial valuation method. Actuarial gains and losses are recognised immediately as an
income or expense in the income statement.
The University recognises amounts payable to defined contributions schemes as an expense in the income
statement in the period that the service has been rendered by the employee.
The ANNUAL University REPORT of Western 2007Australia37