GCS ANNUAL REPORT 2014

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014
ii. Construction contracts
The Group enters into construction contracts to undertake
formwork supply and installation for a fixed sum and price.
When the outcome of the fixed price construction contract
can be estimated reliably, revenue and costs are accounted
for on a stage of completion method. The stage of completion
is established by comparing costs incurred to date against
estimated cost to complete and total cost which requires the
use of estimates and assumptions.
When the outcome of the fixed price construction contract
cannot be estimated reliably, revenues are recognised to the
extent that costs are recoverable and costs are recognised in
the period they are incurred.
iii. Depreciation
As at 1 July 2013, the depreciation estimate of the hire plant
and equipment assets was revised from a straight line bases
to a ‘units of use’ basis to better reflect the expected pattern
of consumption of these assets. The ‘units of use’ has been
determined based upon equipment utilisation measured by the
number of days on hire within a month against the total number
of days available in the month. The company will continue to
adopt this accounting estimate for depreciation in subsequent
financial reporting of the business operations. Refer to Note
3(n) for further details on depreciation.
ab. New accounting standards and interpretations
not yet effective
The following new accounting standards and interpretations
have been issued, but are not mandatory for financial years
ended 30 June 2014. They have not been adopted in preparing
the financial statements for the year ended 30 June 2014
and are expected to impact the entity in the period of initial
application. The Group’s assessment of the impact of these
new standards and interpretations is set out below.
• AASB 9 Financial Instruments and its consequential
amendments. This standard and its consequential
amendments are applicable to annual reporting periods
beginning on or after 1 January 2018 and completes phases
I and III of the IASB’s project to replace IAS 39 (AASB 139)
‘Financial Instruments: Recognition and Measurement’. This
standard introduces new classification and measurement
models for financial assets, using a single approach
to determine whether a financial asset is measured at
amortised cost or fair value. The accounting for financial
liabilities continues to be classified and measured in
accordance with AASB 139, with one exception, being that
the portion of a change of fair value relating to the entity’s
own credit risk is to be presented in other comprehensive
income unless it would create an accounting mismatch.
Chapter 6 ‘Hedge Accounting’ supersedes the general
hedge accounting requirements in AASB 139 and provides
a new simpler approach to hedge accounting that is
intended to more closely align with risk management
activities undertaken by entities when hedging financial
and non-financial risks. The consolidated entity will adopt
this standard and the amendments from 1 July 2018. As
the entity does not have any financial liabilities measured
at fair value through profit or loss. The amendments will not
require any changes in fair value attributable to liabilities.
• AASB 2013-3 Amendments to AASB 136 - Recoverable
Amount Disclosures for Non-Financial Assets. These
amendments are applicable to annual reporting periods
beginning on or after 1 January 2014. The disclosure
requirements of AASB 136 ‘Impairment of Assets’ have
been enhanced to require additional information about
the fair value measurement when the recoverable amount
of impaired assets is based on fair value less costs of
disposals. Additionally, if measured using a present value
technique, the discount rate is required to be disclosed.
The adoption of these amendments from 1 July 2014 may
increase the disclosures by the consolidated entity.
• Annual Improvements to IFRSs 2010-2012 Cycle. These
amendments are applicable to annual reporting periods
beginning on or after 1 July 2014 and affects several
Accounting Standards as follows: Amends the definition
of ‘vesting conditions’ and ‘market condition’ and adds
definitions for ‘performance condition’ and ‘service
condition’ in AASB 2 ‘Share-based Payment’; Amends
AASB 3 ‘Business Combinations’ to clarify that contingent
consideration that is classified as an asset or liability shall
be measured at fair value at each reporting date; Amends
AASB 8 ‘Operating Segments’ to require entities to disclose
the judgements made by management in applying the
aggregation criteria; Clarifies that AASB 8 only requires
a reconciliation of the total reportable segments assets
to the entity’s assets, if the segment assets are reported
regularly; Clarifies that the issuance of AASB 13 ‘Fair Value
Measurement’ and the amending of AASB 139 ‘Financial
Instruments: Recognition and Measurement’ and AASB 9
‘Financial Instruments’ did not remove the ability to measure
short-term receivables and payables with no stated interest
rate at their invoice amount, if the effect of discounting
is immaterial; Clarifies that in AASB 116 ‘Property, Plant
and Equipment’ and AASB 138 ‘Intangible Assets’, when
an asset is revalued the gross carrying amount is adjusted
in a manner that is consistent with the revaluation of
the carrying amount (i.e. proportional restatement of
accumulated amortisation); and Amends AASB 124 ‘Related
Party Disclosures’ to clarify that an entity providing key
management personnel services to the reporting entity or
to the parent of the reporting entity is a ‘related party’ of
the reporting entity. The adoption of these amendments
from 1 July 2014 will not have a material impact on the
consolidated entity.
GLOBAL CONSTRUCTION SERVICES LIMITED ANNUAL REPORT 2014
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