3110 NEW ZEALAND GAZETTE, No. 133 4 SEPTEMBER 2009

The Foundation uses financial instruments to reduce exposure to fluctuations in foreign currency denominated assets. Forward exchange contracts are entered into to hedge foreign currency denominated assets. These are converted to the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the Statement of Financial Performance.

The Foundation ceases to recognise a financial asset when and only when the contractual rights to cash flows from the financial asset expire.

Impairment
If the recoverable amount of an item of property, plant and equipment is less than its carrying amount, the item is written down to its recoverable amount. The write down of an item recorded at historical cost is recognised as an expense in the income statement. When a revalued item is written down to recoverable amount, the write down is recognised as a downward revaluation to the extent of the corresponding revaluation reserve, and any balance recognised in the income statement.

The carrying amount of an item of property, plant and equipment that has previously been written down to recoverable amount is increased to its current recoverable amount if there has been a change in the estimates used to determine the amount of the write down. The increased carrying amount of the item will not exceed the carrying amount that would have been determined if the write down to recoverable amount had not occurred.

Reversals of impairment write downs are accounted for as follows:

• On property, plant and equipment that are not revalued, the reversal is recognised in the income statement; and
• On revalued property, plant and equipment, the reversal is recognised as an upward revaluation.

Taxation
The Income Tax Act 1994 provides exemption from income tax for Community Trusts established under the Trustee Banks Restructuring Act 1988. The amendment applied from the 2005 income year, and consequently no taxation has been provided for in these financial statements. The Whanganui Charitable Foundation Ltd is a limited liability company registered as a charitable entity under the Charities Act 2005 (CC21727)

Goods and Services Tax
The financial statements have been prepared on a GST exclusive basis.

Accounts Receivable and Payable
Receivables and payables are initially recorded at fair value and subsequently carried at amortised cost using the effective interest method. Due allowance is made for impaired receivables (doubtful debts).

Employee benefits
Liabilities for annual leave, sick leave and long-service leave are accrued and recognised in the balance sheet. Annual leave and sick leave are recorded at the undiscounted amount expected to be paid for the entitlement earned. For sick leave this is based on the unused entitlement accumulated at balance date and expected to be utilised in the future.

For long-service leave the liability is equal to the present value of the estimated future cash outflows as a result of employee services provided at balance date.

Changes in accounting policies

• There have been no changes in accounting policies

2 Grants

3 Trust Funds and Reserves

Trust Capital
The Original Capital of the Foundation arose from the sale of shares in Trust Bank Limited. The Original Capital and the Capital Maintenance Reserve form the Trust Capital. Trustees have resolved to preserve the Trust Capital for the benefit of present and future generations. This is achieved by setting aside each year sufficient sums from Reserves to increase the Trust Capital by the annual rate of inflation as measured by the Consumer Price Index and the rate of population growth in the region served by the Foundation.