2009/10 Annual Report - Cruising Yacht Club of Australia

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CRUISING YACHT CLUB OF AUSTRALIAANNUAL REPORT Year end March 31 2010NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 March 2010 (continued)(b) Cash and cash equivalentsCash comprises cash on hand and demand deposits. Cashequivalents are short-term, highly liquid investments that arereadily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value and have amaturity of three months or less at the date of acquisition.Bank overdrafts are shown within borrowings in currentliabilities in the balance sheet.(c) Employee benefitsA liability is recognised for benefits accruing to employees inrespect of wages and salaries, annual leave and long serviceleave when it is probable that settlement will be required andthey are capable of being measured reliably.Liabilities recognised in respect of employee benefitsexpected to be settled within 12 months, are measured attheir nominal values using the remuneration rate expectedto apply at the time of settlement.Liabilities recognised in respect of employee benefits whichare not expected to be settled within 12 months aremeasured as the present value of the estimated future cashoutflows to be made by the company in respect of servicesprovided by employees up to reporting date.Defined contribution plansContributions to defined contribution superannuation plansare expensed when employees have rendered serviceentitling them to the contributions.Long term service benefitsThe Company’s net obligation in respect of long-term servicebenefits, other than pension plans, is the amount of futurebenefit that employees have earned in return for their servicein the current and prior periods. The obligation is calculatedusing expected future increases in wage and salary ratesincluding related on-costs and expected settlement dates, andis discounted using rates for Commonwealth Governmentbonds at the balance sheet date which have maturity datesapproximating to the terms of the Company’s obligations.(d) Financial assetsLoans and receivablesTrade receivables, loans, and other receivables that havefixed or determinable payments that are not quoted in anactive market are classified as ‘loans and receivables’. Loansand receivables are measured at amortised cost using theeffective interest method less impairment.Interest is recognised by applying the effective interest rate.Effective interest methodThe effective interest method is a method of calculating theamortised cost of a financial asset and of allocating interestincome over the relevant period. The effective interest rate isthe rate that exactly discounts estimated future cash receipts(including all fees on points paid or received that form anintegral part of the effective interest rate, transaction costsand other premiums or discounts) through the expected lifeof the financial asset, or, where appropriate, a shorter period.Income is recognised on an effective interest rate basis fordebt instruments other than those financial assets ‘at fairvalue through profit or loss’.Impairment of financial assetsFinancial assets, other than those at fair value through profitor loss, are assessed for indicators of impairment at eachbalance sheet date. Financial assets are impaired where thereis objective evidence that as a result of one or more eventsthat occurred after the initial recognition of the financialasset the estimated future cash flows of the investment havebeen impacted. For financial assets carried at amortisedcost, the amount of the impairment is the differencebetween the asset’s carrying amount and the present valueof estimated future cash flows, discounted at the originaleffective interest rate.The carrying amount of the financial asset is reduced bythe impairment loss directly for all financial assets with theexception of trade receivables where the carrying amountis reduced through the use of an allowance account. Whena trade receivable is uncollectible, it is written off againstthe allowance account. Subsequent recoveries of amountspreviously written off are credited against the allowanceaccount. Changes in the carrying amount of the allowanceaccount are recognised in profit or loss.If, in a subsequent period, the amount of the impairment lossdecreases and the decrease can be related objectively to anevent occurring after the impairment was recognised, thepreviously recognised impairment loss is reversed throughprofit or loss to the extent the carrying amount of theinvestment at the date the impairment is reversed does notexceed what the amortised cost would have been had theimpairment not been recognised.34
CRUISING YACHT CLUB OF AUSTRALIAANNUAL REPORT Year end March 31 2010NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 31 March 2010 (continued)(e) Financial instruments issued by the companyDebt and equity instrumentsDebt and equity instruments are classified as either liabilitiesor as equity in accordance with the substance of thecontractual arrangement.Financial liabilitiesFinancial liabilities are classified as either financial liabilities ‘atfair value through profit or loss’ or other financial liabilities.Other financial liabilitiesOther financial liabilities, including borrowings, are initiallymeasured at fair value, net of transaction costs.Other financial liabilities are subsequently measured atamortised cost using the effective interest method, withinterest expense recognised on an effective yield basis.The effective interest method is a method of calculating theamortised cost of a financial liability and of allocating interestexpense over the relevant period. The effective interestrate is the rate that exactly discounts estimated future cashpayments through the expected life of the financial liability, or,where appropriate, a shorter period.(f) Impairment of other tangible and intangible assetsAt each reporting date, the company reviews the carryingamounts of its tangible and intangible assets to determinewhether there is any indication that those assets havesuffered an impairment loss. If any such indication exists, therecoverable amount of the asset is estimated in order todetermine the extent of the impairment loss (if any). Wherethe asset does not generate cash flows that are independentfrom other assets, the company estimates the recoverableamount of the cash-generating unit to which the asset belongs.Where a reasonable and consistent basis of allocation canbe identified, corporate assets are also allocated to individualcash-generating units, or otherwise they are allocated to thesmallest group of cash-generating units for which a reasonableand consistent allocation basis can be identified.Recoverable amount is the higher of fair value less costs tosell and value in use. In assessing value in use, the estimatedfuture cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current marketassessments of the time value of money and the risks specificto the asset for which the estimates of future cash flows havenot been adjusted.If the recoverable amount of an asset is estimated to beless than its carrying amount, the carrying amount of theasset is reduced to its recoverable amount. An impairmentloss is recognised immediately in profit or loss, unless therelevant asset is carried at revalued amount, in which case theimpairment loss is treated as a revaluation decrease.Where an impairment loss subsequently reverses, the carryingamount of the asset is increased to the revised estimate of itsrecoverable amount, but only to the extent that the increasedcarrying amount does not exceed the carrying amount thatwould have been determined had no impairment loss beenrecognised for the asset (cash-generating unit) in prior years.A reversal of an impairment loss is recognised in profit or lossimmediately, unless the relevant asset is carried at fair value, inwhich case the reversal of the impairment loss is treated as arevaluation increase.(g) Income taxNo provision has been made for income tax as theCompany is exempt under Section 50-45 of the Income TaxAssessment Act (1997), provided it continues as a sportingclub predominately encouraging and promoting the sport ofyachting, boating, cruising for pleasure and the building andsailing of yachts and boats. Accordingly tax affect accountinghas not been adopted by the Company.(h) InventoriesInventories are valued at the lower of cost and net realisablevalue. Costs, including an appropriate portion of fixed andvariable overhead expenses, are assigned to inventory onhand by the method most appropriate to each particularclass of inventory, with all categories being valued on a first infirst out basis. Net realisable value represents the estimatedselling price less all estimated costs of completion and costsnecessary to make the sale.(i) LeasesLeases are classified as finance leases when the terms of thelease transfer substantially all the risks and rewards incidentalto ownership of the leased asset to the lessee. All otherleases are classified as operating leases.Finance leasesAssets held under finance leases are initially recognised attheir fair value or, if lower, at amounts equal to the presentvalue of the minimum lease payments, each determinedat the inception of the lease. The corresponding liability to35
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2009/10 Annual Report - Cruising Yacht Club of Australia

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