Annual Report 2011 - Sturt Fleurieu

Notes to the Financial Statements continuedFor year ended 31 December 2011Fair ValueFair value is determined based on current bid prices forall quoted investments. Valuation techniques are appliedto determine fair value for all unlisted securities, includingrecent arm’s length transactions, reference to similarintruments and option pricing models.ImpairmentAt the end of each reporting period, the Associationassess whether there is objective evidence that afinancial instrument has been impaired. In the caseof available-for-sale financial instruments, a prolongeddecline in the value of the instrument is consideredto determine whether an impairment has arisen.Impairment losses are recognised in the statement ofcomprehensive income.DerecognitionFinancial assets are derecognised where the contractualrights to receipt of cash flows expires or the assetis transferred to another party whereby the entity nolonger has any significant continuing involvement in therisks and benefits associated with the asset. Financialliabilities are derecognised where the related obligationsare either discharged, cancelled or expired. Thedifference between the carrying value of the financialliability extinguished or transferred to another party andthe fair value of consideration paid, including the transferof non-cash assets or liabilities assumed is recognised inprofit or loss.(d) LeasesLeases of fixed assets where substantially all the risksand benefits incidental to the ownership of the asset, butnot the legal ownership, that are transferred to entities inthe Association are classified as finance leases.Finance leases are capitalised by recording an assetand a liability at the lower of the amounts equal to thefair value of the leased property or the present value ofthe minimum lease payments, including any guaranteedresidual values. Lease payments are allocated betweenthe reduction of the lease liability and the lease interestexpense for the period.Leased assets are depreciated on a straight-line basisover the shorter of their estimated useful lives or thelease term.Lease payments for operating leases, where substantiallyall of the risks and benefits remain with the lessor, arecharged as expenses on a straight-line basis over the lifeof the lease term.Lease incentives under operating leases are recognisedas a liability and amortised on a straight-line basis overthe life of the lease term.The minimum rental revenue of operating leases withfixed rental increases, where the lessor effectively retainssubstantially all of the risks and benefits of ownership ofthe leased item, are recognised on a straight-line basis.Revenue from other leases is recognised in accordancewith the lease agreement, which is considered to bestrepresent the pattern of service rendered through theprovision of the leased asset.(e) Impairment of AssetsAt each reporting date, the Association reviews thecarrying values of its tangible and intangible assets todetermine whether there is any indication that thoseassets have been impaired. If such an indication exists,the recoverable amount of the asset, being the higher ofthe asset’s fair value less costs to sell and value in use,is compared to the asset’s carrying value. Any excess ofthe asset’s carrying value over its recoverable amount isexpensed to the statement of comprehensive income.Where it is not possible to estimate the recoverableamount of an individual asset, the Association estimatesthe recoverable amount of the cash-generating unit towhich the asset belongs.(f) Employee BenefitsProvision is made for the Association’s liability foremployee benefits arising from services rendered byemployees to balance date. Employee benefits thatare expected to be settled within one year have beenmeasured at the amounts expected to be paid when theliability is settled. Employee benefits payable later thanone year have been measured at the present value ofthe estimated future cash outflows to be made for thosebenefits. Those cashflows are discounted using marketyields on National Government bonds with terms tomaturity that match the expected timing of cashflows.(g) Cash and Cash EquivalentsCash and cash equivalents include cash on hand,deposits held at call with banks, other short-term highlyliquid investments with original maturities of three monthsor less, and bank overdrafts. Bank overdrafts are shownwithin short-term borrowings in current liabilities on thestatement of financial position.32Annual Report 2011