Financial Statements of Waikato River Clean-Up Trust
for the period ended 30 June 2012
36
i) Provisions
A provision is recognised for future expenditure of uncertain amount or timing
when there is a present obligation (either legal or constructive) as a result
of a past event, it is probable that expenditure will be required to settle the
obligation, and a reliable estimate can be made of the amount of the obligation.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of the expenditure expected to
be required to settle the obligation using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the obligation. The increase in the provision due to the passage of time is
recognised in “finance income”.
j) Income tax
In accordance with schedule 5 of Waikato-Tainui Raupatu Claims (Waikato River)
Settlement Act 2010 the trust has been granted exemption from income tax.
Income tax Act 2007 section CW 41 specifies non business income will exempt
for tax. The trust has been granted charitable status by the Charities Commission
and is registered as a charity.
k) Goods and Service Tax
The entity registered for GST during the year and GST input tax was available to
be claimed from the 12th of April 2012 therefore the financial statements have
been prepared on a GST exclusive date from the 12th of April. Prior to this date
the financial statements have been prepared on a GST inclusive basis.
l) Critical accounting estimates and assumptions
In preparing these financial statements, the Trust has made estimates and
assumptions concerning the future. These estimates and assumptions may differ
from the subsequent actual results. Estimates and assumptions are continually
evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below:
i) Settlement funds and funding receivable
Refer to note 11
m) Standards, amendments and interpretations issued that are not yet effective and have not
been early adopted
Standards amendments and interpretations that are not yet effective and have
not been early adopted, and which are relevant to the trust include:
NZ IFRS 9 Financial Instruments
Effective date - periods beginning on or after: 1 January 2013
Standard issued in November 2009 (NZ IFRS 9 (2009))
NZ IFRS 9 (2009) is the first standard issued as part of a wider project to
replace NZ IAS 39.
NZ IFRS 9 (2009) retains but simplifies the mixed measurement model
and establishes two primary measurement categories for financial assets:
amortised cost and fair value. The basis of classification depends on the
entity’s business model and the contractual cash flow characteristics of the
financial asset. The guidance in NZ IAS 39 on impairment of financial assets
and hedge accounting continues to apply.
Prior periods need not be restated if an entity adopts the standard for
reporting periods beginning before 1 January 2012.
Standard issued in October 2010 (IFRS 9 (2010))
NZ IFRS 9 (2010) adds the requirements related to the classification and
measurement of financial liabilities, and derecognition of financial assets and
liabilities to the version issued in November 2009.