Landcorp - Crown Ownership Monitoring Unit

LANDCORP FARMING LIMITED AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTS CONTINUEDNote 3 – Summary of Significant Accounting Policies (continued)Accounting for taxationIncome tax expense/income comprises current and deferred tax. Income tax is recognised in the Statement of Comprehensive Income, exceptwhere it relates to an item recognised directly in equity, where the income tax is recognised directly in equity.Current tax is the expected tax payable on the taxable income of the year, using tax rates enacted or substantively enacted at the balance sheetdate, and any adjustments to tax payable in respect of previous years.Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying values of assetsand liabilities for financial reporting purposes and the tax base of those assets and liabilities. The amount of deferred tax provided is based onthe difference between the tax base and the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at thebalance sheet date.A deferred tax asset is recognised only to the extent that it is probable that future taxable benefits will be available against which the assetcan be utilised. Deferred tax assets and liabilities are offset when there is a legal right to offset tax liabilities with tax assets and when theGroup intends to settle on a net basis.ReceivablesReceivables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest method, lessimpairment losses. An allowance for irrecoverable amounts is recognised in the Statement of Comprehensive Income when there is objectiveevidence that a receivable is impaired.InventoryAll inventory items are stated at lower of cost or net realisable value at balance date. The cost of agricultural produce transferred into inventoryis measured at its fair value less estimated point-of-sale costs at date of harvest. The net realisable value represents the estimated selling price ofinventories less all estimated costs of completion and costs necessary to make the sale.Property held for saleProperty held for sale comprises property that has been identified for sale and development land. Properties that have been identified for sale areclassified as property held for sale when a sales plan has been implemented and an unconditional sales contract is expected to be signed within ayear. Development land is held for sale to development joint venture entities.Property held for sale is measured at the lower of the carrying value of the property when it was classified as property held for sale and fair valueless cost to sell.Biological assets(a) LivestockLivestock are recorded at fair value less estimated point-of-sale costs.Changes in the value of livestock are recognised in the Statement of Comprehensive Income. Changes in value due to livestock price movementsare beyond Landcorp’s control and do not form part of Landcorp’s livestock management policies, so are recognised in the Statement ofComprehensive Income as gain/loss due to price changes on livestock. Value changes that form part of Landcorp’s livestock management policies,including animal growth and changes in livestock numbers, are recognised in the Statement of Comprehensive Income within revenue.(b) ForestsForests are recorded at fair value less estimated point-of-sale costs, based on estimated cashflows and using a market discount rate.Changes in the value of forests are recognised in the Statement of Comprehensive Income. Changes in value due to movements in forestry pricesare beyond Landcorp’s control and do not form part of Landcorp’s forest management practices. These changes in value due to price movementsare recognised as gain/loss due to price changes on forests. Value changes that form part of Landcorp’s forest management policies, includingforest growth, are recognised in the Statement of Comprehensive Income within profit before property sales and revaluations.Standing forests are only sold as part of a land sale and do not form part of Landcorp’s forest management practices. Profits arising from thesale of standing forests are recognised in the Statement of Comprehensive Income as profit on sale of forests, after net profit before propertysales and revaluations.56