Annual Report - Bega Cheese

Financial Statements
Period Financial Ended Statements 30 June 2010
Notes Period to Ended the Financial 30 June Statements
2010
Notes to the Financial Statements
f. Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
g. Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of
ownership are classified as finance leases (Note 11). 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 income statement 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 if there is no
reasonable certainty that the Group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are
classified as operating leases (Note 24). Payments made under operating leases (net of any incentives received from the
lessor) are charged to the income statement on a straight line basis over the period of the lease.
Lease income from operating leases where the Group is a lessor is recognised in income on a straight line basis over the
lease term. The respective leased assets are included in the balance sheet based on their value.
h. Business Combinations
The acquisition 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. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred,
the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value
of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary.
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value
or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiondate
fair value of any previous equity interest in the acquriee over the fair value of the Group’s share of the net identifiable
assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of
subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or
loss as a bargain purchase.
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.
i. Impairment of Assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are
tested 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. The recoverable amount is the higher of an assets 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 groups of assets (cash generating units). Non
financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each
reporting period.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating
unit). The reversal of an impairment loss is recognised immediately in income unless the relevant asset is carried at fair
value, in which case the reversal of the impairment loss is treated as a revaluation increase.
Bega Cheese Limited 2010 Annual Report 20
Bega Cheese Limited 2010 Annual Report 20