5 SEPTEMBER 2012 NEW ZEALAND GAZETTE, No. 109 3119

Depreciation

Depreciation is provided over the useful life of the assets. Land is not depreciated. Buildings are depreciated at 2% per annum on straight line basis. Office equipment and furniture are depreciated on a diminishing value basis. The rates used are those approved by Trustees as follows:

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 Statement of Comprehensive Income. 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 Statement of Comprehensive Income.

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 Statement of Comprehensive Income; and
• On revalued property, plant and equipment, the reversal is recognised as an upward revaluation in the Statement of Comprehensive Income.

Foreign Currency Transactions and Balances

Foreign currency transactions are translated to New Zealand dollars at the spot exchange rate applying at the date of the transaction.

All amounts denominated in foreign currencies at balance date are translated to New Zealand dollars at the balance date closing exchange rate.

All realised and unrealised gains and losses on foreign currency transactions are recognised in the Statement of Comprehensive Income.

Financial Assets

Financial assets are recognised in the Statement of Financial Position when the Foundation becomes party to a financial contract. They include cash balances, investments, term deposits, accrued income and intercompany balances.

All assets that are financial instruments are recognised in the Statement of Financial Position.

All financial assets are initially recognised at fair value, being the fair value of consideration paid. After initial recognition, financial assets designated at fair value through profit or loss are revalued to fair value at each reporting date.

For investments that are actively traded in organised financial markets, fair value is determined by reference to exchange quoted market bid prices at the close of business on the reporting date. Investments in pooled funds are valued at the unit exit price (“bid price”) determined by the Fund Manager at the close of business on the reporting date.

All realised and unrealised gains or losses on investments are recognised in the Statement of Comprehensive Income.

Investment transactions are recorded by Fund Managers on a transaction date basis.

Financial assets are managed and their performance evaluated on a fair value basis in accordance with risk management and investment strategies of the Foundation, as disclosed in Note 13.

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

Taxation

The Income Tax Act 2007 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 Company is registered as a charitable entity under the Charities Act 2005 (CC21727) and is therefore exempt from tax.

Goods and Services Tax

The financial statements have been prepared on a GST exclusive basis except for the amounts included for accounts receivable and accounts payable, which include GST where invoiced.

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). All accounts receivable are considered to be receivable in full and therefore there has been no requirement to provide a provision for doubtful debts.

Employee benefits

Liabilities for annual leave, sick leave and long-service leave are accrued and recognised in the Statement of Financial Position.

Changes in accounting policies

From 1 April 2011, the building held by the Company has been depreciated at 2% per annum on a straight line basis. This has resulted in a depreciation charge of $11,590 being recognised in the Group Statement of Comprehensive Income for the year ended 31 March 2012. Previously the building was not depreciated.

There were no other changes in accounting policy during the year.