Otago Community Trust

Notes to the financial statements

For the year ended 31 March 2013

Significant accounting policies (continued)

(j) Income tax expense (continued)

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(k) Donation Expenditure

The entity makes discretionary donations. The donations are recognised as expenditure when the Trustees approve to award the applicant a donation.

(l) Statement of cashflows

For the purpose of the statement of cashflows, cash and cash equivalents include cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. The following terms are used in the statement of cash flows:

• Operating activities are the principal revenue producing activities of the Group and other activities that are not investing or financing activities;
• Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents; and
• Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowing of the entity.

(m) New standards adopted and interpretations not yet adopted

Certain new accounting standards have been published that are not mandatory for the current reporting period. It is not expected that these standards will have any material impact on the financial statements.

(n) Changes in Accounting Policy

All accounting policies have been applied on a basis consistent with those used in previous years.

4. Determination of fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(a) Investment property

An external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group’s investment property on an annual basis. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The discounted cashflow technique is also applied as a cross-check of the valuation.

(b) Investments in equity and debt securities

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 Statement of Financial Position date. Investments in pooled funds are valued at the unit exit price determined by the Fund Manager at the close of business on the Balance Sheet date.