29 AUGUST 2012 NEW ZEALAND GAZETTE, No. 105 3027

THE COMMUNITY TRUST OF SOUTHLAND

NOTES TO THE FINANCIAL STATEMENTS

For the Year Ended 31 March 2012

2. STATEMENT OF ACCOUNTING POLICIES (Cont’d)

t) Financial Assets & Liabilities (Cont’d)

Impairment of Financial Assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of Accounts Receivable where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectable, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

u) New accounting standards and interpretations not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for 2012 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.

NZ IFRS 9 Financial Instruments (effective for annual reporting periods beginning on or after 1 January 2015)
The new standard addresses the classification, measurement and de-recognition of financial assets and financial liabilities. When the standard is adopted, there is not expected to result in a change in measurement for financial assets as the current categorisation of loans and receivables is expected to remain the same. The Group would not have any transactions to disclose under the new IAS 1 and IFRS 7 disclosure requirements relating to gain or loss arising on de-recognition of financial assets measured at amortised cost. There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated as at fair value through profit or loss and the Group does not have any such liabilities. The de-recognition rules have been transferred from NZ IAS 139 Financial Instruments: Recognition and Measurement and have not been changed. The Group has not yet decided when to adopt NZ IFRS 9.

NZ IFRS 13 Fair Value Measurement (effective for annual reporting periods beginning on or after 1 January 2013)
NZ IFRS 13 explains how to measure fair value and aims to enhance fair value disclosures. The Group has yet to determine which, if any, of its current measurement techniques will have to change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on any of the amounts recognised in the financial statements. However, application of the new standard will impact the type of information disclosed in the notes to the financial statements. The Group does not intend to adopt the new standard before its operative date, which means that it would be first applied in the annual reporting period ending 31 March 2014.