BankVic Annual Report 2019

time upon completion of performance obligation.
iii. Other non-interest income
Service charges are recognised as income when charged to the member. Insurance and other commission is recognised
as income upon the provision of services.
n. Expenses
i. Interest expense
Interest is calculated on the daily balance and posted to the accounts systematically, or on maturity of the term deposit.
Interest on savings is brought to account on an accrual basis. The amount of the accrual is shown as part of payables.
ii. All other operating expenses
Operating expenses are recognised when the Company has incurred the liability for goods and services purchased.
o. Intangible assets
Intangible assets, which consists of computer software, are stated at cost less accumulated amortisation (see below) and
impairment losses.
Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible
assets, which is between 3 and 6 years.
p. Directors’ severance benefits
A Director appointed or elected prior to 18 November 2011 is entitled to a severance benefit upon ceasing as a Director
of the Company equivalent to the previous two years earnings where a Director has at least nine years of service and the
previous three years earnings where a Director has at least fifteen years service. A Director appointed or elected post 18
November 2011 who is entitled to a severance benefit will receive a sum not exceeding twelve months remuneration in
accordance with s200F of the Corporations Act 2001 (Cth).
Note 20(f) contains further details on when a Director is not entitled to receive a severance benefit.
The Company starts provisioning for a Director’s severance benefit from their initial appointment or election. For
Directors with less than nine years of service the provision is calculated on a pro-rata basis of their current entitlement.
For Directors with at least nine years service but less than fifteen years service the provision is based on their previous
two years earnings plus a pro-rata amount of their third years earnings. For Directors with at least fifteen years service the
provision is equal to their entitlement (i.e. the previous three years earnings).
q. Redeemed capital reserve
Redeemed capital reserve represents the amount of redeemable preference shares redeemed since 1 July 1999. The
Corporations Act requires redemption of shares to be made out of profits. Since the value of the shares redeemed has
been paid to members in accordance with the Constitution of the Company, the redeemed capital reserve account
represents the amount of profits appropriated to the account.
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