63
waikato-tainui
annual report 2014
2.7 Employee benefits
Liabilities are recognised for benefits accruing to employees in respect of wages and salaries, annual leave, and sick leave where it
is probable that settlement will be required and they are capable of being measured reliably.
Liabilities in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement.
Liabilities in respect of employee benefits which are not expected to be settled within 12 months are measured at the present
value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to
reporting date.
The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the achievements
of agreed key performance indicators, including the achievement of financial budget targets. The Group recognises a provision
where contractually obliged or where there is a past practice that has created a constructive obligation.
2.8 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of
comprehensive income on a straight‑line basis over the period of the lease.
Property interests held by a lessee under an operating lease are recognised as part of the carrying amount of the investment
property with a corresponding liability at fair value through profit or loss being recorded.
2.9 Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to
complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the rate associated with project
related borrowings or the weighted average interest rate applicable to the Group’s outstanding borrowings during the year.
2.10 Relativity settlement
Initial receipts derived from the relativity settlement had been recognised on a cash‑basis. Subsequent relativity income is
recognised at the amount receivable under the relativity mechanism based on total treaty settlements as notified by the
Government. These amounts are recognised on an accruals basis when the amounts receivable are able to be reliably measured,
as this will be the lowest amount receivable from the Government to the Trust (see note 29).
2.11 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short‑term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to
an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in
the statement of financial position.
2.12 Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for
doubtful debts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A
provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of
the provision is recognised in the statement of comprehensive income within expenses.
When a trade receivable is uncollectible, it is written off. Subsequent recoveries of amounts previously written off are credited
against other expenses in the statement of comprehensive income.
