2003 - 04 Annual Report - Sbs

11415. Financial instruments15(a) Terms, conditions and accounting policiesFinancial Instrument Notes Accounting Policies and Methods(including recognition criteria andmeasurement basis)Nature of underlying instrument(including significant terms & conditions affectingthe amount, timing and certainty of cash flows)Financial assetsFinancial assets are recognised when controlover future economic benefits is establishedand the amount of the benefit can be reliablymeasured.Cash 8(a) Cash at bank and on hand is recognised at itsnominal value. Interest is credited to revenueas it accrues.Funds, mainly from monthly drawdowns ofappropriation placed in bank accounts withthe Corporation’s banker.Receivables for goodsand services8(b)The receivables are recognised at the nominalamounts less any provision for doubtfuldebts. A provision is raised for doubtful debtsbased on a review of all outstanding amountsat year end. Bad debts are written off duringthe period in which they are identified.Credit terms for receivables for goods andservices are net 45 days for advertisingdebtors and 30 days for other debtors.Non-government security 8(c) The Corporation has a series of investmentswith banks and other financial institutions forfunds not immediately required for operationalexpenditure (for example, analogue extensionmoneys received from the TV fund to meetexpenditure in the next twelve years).The investments are by purchase ofnegotiable certificates of deposits for varyingperiods between 1 month and 12 years. Theweighted average effective interest rate ofthese investments is 5.7% (2003: 5.5%).Financial liabilitiesLoan from Government10(a)15(b)(viii)Financial liabilities are recognised when apresent obligation to another party is enteredinto and the amount of the liability can bereliably measured.Loans from Government are recognised attheir principal amounts. Interest is expensedas it accrues.SBS established a loan facility with the privatesector in1992 for the purpose of fundingits specialised broadcasting premises atArtarmon. The facility expired in 2002, andwas refinanced through an unsecured loanfrom Government at the prevailing 10 yearGovernment bond rate (6.02%) – refer to note15(b)(viii)).Finance lease liabilities 10(b) Liabilities are recognised at the presentvalue of the minimum lease payments atthe beginning of the lease. The discountrates used are estimates of the interest ratesimplicit in the leases.Trade creditors 12(a) Creditors and accruals are recognised attheir nominal amounts, being the amounts atwhich the liabilities will be settled. Liabilitiesare recognised to the extent that the goods orservices have been received (irrespective ofhaving been invoiced).At reporting date, the Corporation had oneof two separate finance lease agreementsoutstanding. The terms of the remaining leaseis 5.5 years. The interest rate implicit in thelease averaged 7.0%.Settlement is usually made net 30 days.