1. Explanation of Major Variances between Actual Results and Original Budget

Explanations are provided for significant variances between actual results and the original budget, as reflected in the May 2019 Portfolio Budget Statements (PBS) of the ABC. Significant variances are typically greater than $20,000,000 though they include variances which are relevant to the performance of the ABC, not merely numerically significant variances between the original budget and the actual amounts. The budget is not audited.

The ABC’s total comprehensive loss for the financial year to June 2020 was $18,361,000. This result was $7,231,000 unfavourable against the budgeted total comprehensive loss of $11,130,000.

The primary factor which contributed to this total variance was the net negative impact of the property portfolio revaluation ($9,967,000). The original budget did not incorporate this factor in due to the inherent uncertainty of the outcome of the revaluation process. The valuation was conducted by expert valuers and is accounted for in accordance with AASB 13 Fair Value Measurement and AASB 116 Property, Plant and Equipment.

The result also includes the impact of the introduction of leases under new accounting standard AASB 16 Leases which was introduced on 1 July 2019. This is discussed in further detail in Note 1B below. Finally, the ABC commenced a significant restructuring process in June 2020 which accounts for the remainder of the deficit, discussed in further detail in Notes 1C and 1L below.

A. Timing of original budget

The original budget was prepared prior to the completion and approval of the ABC’s internal budget by the ABC Board. Differences between the original budget and the ABC’s internal budget allocations may result in amounts being reflected in different line items between the original budget and the actual results at 30 June 2020.

B. Implementation of new accounting standard

New accounting standard AASB 16 Leases was effective for the financial year to June 2020 and has had a material impact on a number of balances within the Statement of Comprehensive Income, Statement of Financial Position and Statement of Cash Flows.

AASB 16 effectively removes the classification of operating lease and requires lessees to recognise a lease liability and a corresponding “right-of-use” asset for all leases, with some limited exceptions. The ABC leases the following categories of assets that fall under the definition of AASB 16:

• A Satellite transponder for digital television distribution.
• Decoder boxes and dishes for satellite downlink services.
• Transmission facility assets for digital terrestrial television transmission.
• Transmission facility assets for terrestrial radio transmission.
• Properties around Australia and overseas leased from various vendors, including Leasehold property leases which the ABC has pre-paid.
• Vehicles.
• Leasehold land, previously classified under (ABC owned) Property, plant and equipment.

This change took a substantial portion of transmission and distribution costs that previously were recognised as supplier expenses and created a number of right-of-use assets and associated finance lease liabilities that are now recognised in the Statement of Financial Position. (Refer to Notes 1D, 1E, 1I and 1K for further commentary).

The net impact on the Statement of Comprehensive Income due to the adoption of AASB 16 is negative $2.9m.

In line with Department of Finance guidelines, the 2020 budget did not incorporate the effect of this standard.

C. Employee benefits

Employee benefits expenses are higher than the original budget primarily due to the recognition of a provision for restructuring costs of $31,700,452. Refer to Note 10A Employee provisions for further commentary.

D. Suppliers

Supplier expenses are lower than the original budget primarily due to the impact of AASB 16 Leases in the financial statements. Significant expenses related to transmission and distribution contracts, as well as property and vehicle lease expenses were previously recorded in this category. These lease payments are now substituted by depreciation on ABC right-of-use assets and interest costs on the associated lease liabilities (refer to Notes 1B and 1E).

Supplier expenses are also lower than the original budget due to the implementation of savings initiatives. These savings in suppliers have been quarantined to offset against the cost of restructuring (refer to Notes 1C and 1L).

E. Depreciation on ABC right-of-use assets

This is a new category on the Statement of Comprehensive Income, recognised as a result of the implementation of AASB 16 Leases. A depreciation charge is now recognised on all right-of-use assets recognised in the Statement of Financial Position (refer to Notes 1B and 1I).

F. Other investments

The balance of Other investments is higher than the original budget as there was a net cash inflow during the year on the ABC’s operational result. Delays driven by COVID-19 reduced the cash outflow on both capital projects and program productions. This was combined with lower operational cash outflow via reduced activity, most particularly in reduced travel activity. There was also a net cash inflow in relation to the Ultimo cladding project, as significant reimbursement from Comcover for project costs was received.

G. ABC-owned land

The balance of ABC-owned land was higher than budget due to a full independent assessment of the ABC’s property portfolio performed in June 2020. Refer to Note 6A ABC owned land, buildings, plant and equipment and intangibles – Recognition and measurement for further commentary.

H. ABC-owned buildings (including improvements)

The balance of ABC-owned buildings was lower than budget due to the revaluation process noted above in Note 1G. The ABC received advice that our building assets should be revalued downwards in accordance with expert assessment and market comparison.

I. ABC right-of-use assets – Land, buildings (including improvements) and plant and equipment

These asset categories were created as a result of the implementation of AASB 16 Leases. They were recognised in the Statement of Financial Position from 1 July 2019 and are now depreciated over the term of the lease (refer to Notes 1B and 1E). A corresponding lease payable liability has also been raised in the Statement of Financial Position (refer to Note 1K).

J. Suppliers

The balance of Suppliers payable is higher than the original budget as there was a higher volume of capital project activity in June 2020 compared to the same time in the prior year, upon which the budget was based. This was driven by a number of projects accelerated in June as COVID-19 restrictions were relaxed across many jurisdictions.

K. Lease liability

This liability category was created as a result of the implementation of AASB 16 Leases. It was recognised in the Statement of Financial Position from 1 July 2019 and is reduced as payments are made to suppliers. It largely offsets the right-of-use assets created (refer to Notes 1B and 1I).

L. Employee provisions

The balance of Employee provisions was higher than budget, primarily due to the recognition of a provision for restructuring costs (refer to Note 1C).

The variance has also been impacted by the actual opening balance on 1 July 2019 being higher than the budgeted opening balance. This was due to the recognition of an additional provision related to estimated historical entitlements owed to casual employees which was not factored into the budget.

M. Cash Flow Statement

Movements in the Cash Flow Statement including higher than budgeted Net cash from operating activities, higher than budgeted Net cash used in investing activities and higher than budgeted Net cash used in financing activities are largely reflective of the explanations provided in Notes 1B, 1D and 1K. In addition, the Cash Flow Statement shows the gross amounts related to the purchase and proceeds of investments separately under investment activities whilst the original budget shows a net figure against Purchase of investments.

As noted at Note 1F, a net cash inflow has been experienced due to delays driven by COVID-19 on both capital projects and program productions. The ABC expects a larger cash outflow in 2021 financial year, in particular due to the restructuring costs referenced in Note 1L being paid.

2. Overview

The Corporation is a Corporate Commonwealth, not-for-profit entity.

Its functions are set out in section 6 of the Australian Broadcasting Corporation Act 1983. Those functions are reflected in the statement of purpose in the ABC Corporate Plan 2019–20, which was prepared in accordance with section 35 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

The Corporation sets out to achieve one outcome: inform, educate and entertain audiences throughout Australia and overseas through innovative and comprehensive media and related services.

The continued existence of the Corporation in its present form and with its present programs is dependent on Government policy and on continued funding by Parliament.

Accounting Framework

The principal accounting policies adopted in preparing the financial statements of the Corporation are stated to assist in a general understanding of these financial statements.

Basis of Preparation of Financial Statements

The financial statements are general purpose financial statements as required by section 42 of the PGPA Act.

The financial statements and notes have been prepared in accordance with;

• PGPA (Financial Reporting) Rule 2015 (FRR); and
• Australian Accounting Standards – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The Corporation’s financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities which are at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Significant Accounting Judgements

In the process of applying the accounting policies listed throughout the financial statements and accompanying notes except as noted, the Corporation has taken the fair value of freehold land to be the market value of similar locations and the fair value of freehold buildings to be the depreciated replacement cost, as determined by an independent valuer.

In addition, the Corporation has taken the fair value of plant, equipment and intangibles to be the depreciated cost which is representative of depreciated replacement cost.

Significant Accounting Estimates and Assumptions

The Corporation has applied estimates and assumptions to the following:

• Depreciation, as detailed in Note 3C Depreciation and amortisation, and Note 6A ABC owned land, buildings, plant and equipment and intangibles;
• Program amortisation, as detailed in Note 3E Program amortisation, and Note 6D Inventories;
• Impairment of financial instruments, as detailed in Note 3H Impairment loss on financial instruments;
• Impairment of non-financial assets, as detailed in Note 3I Write-down and impairment of other assets;
• Valuation of land, buildings, plant and equipment, as detailed in Note 6A ABC owned land, buildings, plant and equipment and intangibles;
• Leased assets and lease liabilities, specifically identification of lease assets and lease liabilities where the ABC has the right to obtain substantially all of the economic benefits, as detailed in Note 6B Right-of-use assets;
• Provision for make good and Provision for building maintenance (cladding), as detailed in Note 9 Other Provisions; and
• Employee provisions detailed in Note 10 Employee Provisions.

No other accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities.

New Accounting Standards

The following standards were applied from 1 July 2019.

AASB 15 Revenue from Contracts with Customers / AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not‐for‐Profit Entities and AASB 1058 Income of Not‐For‐Profit Entities

The ABC has adopted AASB 15 with a date of initial application of 1 July 2019. AASB 15 establishes a comprehensive framework for determining whether, how much, and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

The ABC adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019 and the comparative information presented for 2019 is not restated. The ABC’s adoption of AASB 15 and AASB 1058 had no cumulative effect on prior year earnings, therefore no adjustment was made to retained earnings at 1 July 2019.

Under the new income recognition model the ABC assessed potential income to determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. Where an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), the ABC applied the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria were not met, the ABC considered whether AASB 1058 applies.

Under AASB 1058, the ABC is required to recognise volunteer services at fair value if those services would have been purchased if not provided voluntarily, and the fair value of those services can be measured reliably. The ABC did not receive any material services of this nature in financial year 2019-20.

In relation to AASB 15, the ABC elected to apply the new standard to all new and uncompleted contracts from the date of initial application.

Under AASB 1058, the ABC recognises Revenue from Government based on when control of the funds passes to the Corporation or when the Corporation has an enforceable right to receive funds.

Based on the ABC’s assessment, there were no differences between the amounts prepared under AASB 15 and AASB 1058 and the amounts that would have been presented had AASB 15 and AASB 1058 not been adopted.

AASB 16 Leases

AASB 16 became effective on 1 July 2019.

This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Application of AASB 16 Leases

The Corporation has adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, any comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The Corporation applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

• Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
• Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
• Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and
• Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.

As a lessee, the Corporation previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, the Corporation recognises right-of-use assets and lease liabilities for most leases. However, the Corporation has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less. On adoption of AASB 16, the Corporation recognised right-of-use assets and lease liabilities in relation to leases of office space and vehicles, which had previously been classified as operating leases.

Additionally, the Corporation assessed certain costs, previously considered service charges, against the relevant criteria contained in the standard, to determine whether right-of-use leases existed within these costs. In particular, the Corporation assessed various contracts against the “substantially all of the economic benefits from use” test as per paragraphs B21 – B23 of the standard. This was pertinent to contracts previously considered to be service charges, especially those costs associated with using the assets of service providers to distribute and transmit ABC radio and television services. The major premise of this test was whether the ABC shared transmission and distribution assets with other broadcasters or users to the extent that the ABC receives less than substantially all the economic benefits of the asset.

Prior to the adoption of AASB 16, the majority of the ABC’s leases assets as identified above, were previously recognised as service costs which were expensed on a straight-line basis over the period of service provision.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using the

Corporation’s incremental borrowing rate as at 1 July 2019. The Corporation’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.11%.

The right-of-use assets were measured as follows:

• Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments;
• Leasehold Land: The ABC has four leasehold land properties, the two material ones being the Brisbane and Canberra offices. These were measured at book value as at 1 July 2019, in line with the Public Governance and Accountability (Financial Reporting) Rule 2015:
• All other leases: the carrying value that would have resulted from AASB 16 being applied from the commencement date of the leases.

The Corporation’s transmission right-of-use assets are subject to long lease terms, with some contractual elements expiring in 2044. The length of the lease terms and the resultant contractual liability has contributed to a large liability and right-of-use asset in the ABC’s Statement of Financial Position.

Upon transition, the right-of-use assets were measured at the carrying value of the lease liability.

The following table reconciles the Corporation’s minimum lease commitments disclosed in the entity's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

Income Tax

The Corporation is not subject to income tax pursuant to section 71 of the Australian Broadcasting Corporation Act 1983.

Two of the Corporation’s controlled entities, Music Choice Australia Pty Ltd and The News Channel Pty Limited, while subject to income tax, have been inactive up to and including 30 June 2020.

The Corporation’s interests in MediaHub Australia Pty Limited, Freeview Australia Limited and National DAB Licence Company Limited are subject to income tax.

ABC AustraliaPlus (Shanghai) Cultural Development Co. Ltd, incorporated in the People’s Republic of China, is not subject to Australian income tax.

Any income tax benefit or expense, asset or liability, presented in the financial statements and accompanying notes, is attributable to joint operations. Any income tax benefit or expense is recorded as Income tax benefit/(expense) attributable to joint operations in the Statement of Comprehensive Income. A tax asset is recorded in the Statement of Financial Position in Tax assets.

Goods and Services Tax (GST)

Revenues, gains, expenses and losses are recognised net of the amount of GST except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the revenue or expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST receivable from the ATO is included as a financial asset in the Statement of Financial Position while any net amount of GST payable to the ATO is included as a liability in the Statement of Financial Position in Other payables.

Fringe Benefits Tax (FBT)

The Corporation is subject to Australian FBT.

Events after Reporting Period

The COVID-19 pandemic has created unprecedented uncertainty, in particular the continued lack of market transactions which are ordinarily a strong source of evidence for determining the fair value of business assets.

Actual economic events and conditions in future may be materially different from those estimated by the Corporation at the reporting date. In the event that COVID-19 impacts are more severe or prolonged than anticipated, the business of the Corporation including but not limited to the valuation of properties may be adversely impacted.

At the date of issuing the financial statements, an estimate of the future impact of COVID-19 on the Corporation’s business including but not limited to property assets cannot be made as this will depend on the magnitude and duration of the economic downturn, where the full range of possible effects are currently unknown.

3. Expenses

Recognition and measurement

Employee benefits

Refer to Note 10 Employee Provisions.

Suppliers – Income tax benefit/(expense) attributable to joint operations

The classification of tax benefit/(expense) attributable to joint operations was reviewed and a reclassification was made to comparative disclosures to enhance presentation. Income tax benefit/(expense) attributable to joint operations of $73,000 (2019 ($28,000)) which was previously classified as Suppliers expense is now classified as Income tax benefit/(expense) attributable to joint operations.

Operating leases

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets. Operating lease payments apply to assets exempted from the provisions of AASB 16 Leases and include:

• Assets where the lessor has substantive substitution rights over the asset being leased;
• Assets where the contractual lease term does not exceed 12 months;
• Assets which do not confer substantially all of the economic benefits and risks to the Corporation; and
• Low value assets.

Depreciation on ABC owned assets

Depreciable property, plant and equipment assets are depreciated to their estimated residual values over their estimated useful lives using the straight-line method. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation rates are initially based on their useful lives, reviewed each year and adjusted as appropriate. Depreciation rates applying to each class of depreciable asset are referenced in Note 6A ABC owned land, buildings, plant and equipment and intangibles.

Amortisation of ABC owned intangibles

Intangibles comprise software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is initially recognised at cost and amortised on a straight-line basis over anticipated useful lives between 3-8 years (2019 3-8 years). The amortised cost is considered to approximate fair value. These assets are assessed annually for potential impairment.

Depreciation on ABC right-of-use assets

The depreciation rates for right-of-use assets are based on the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Corporation’s right-of-use assets, as identified under AASB 16 Leases, is depreciated evenly over the remaining contractual period.

Amortisation of purchased programs

Purchased program inventory is amortised in accordance with the policy for amortisation of produced programs. Subsequent sales of residual rights are recognised in the period in which they occur.

Amortisation of produced programs

The cost of produced television program inventory is amortised as follows:

• News, Current Affairs, Live Programs, Factual and Entertainment programs based on current topics - 100% on first screening;
• Childrens, Education and Movies - straight line over three years from completion of production;
• iview-only programs – 100% on first release; and
• Programs not covered above - 100% on first screening.

In addition to the above, programs that are assessed as no longer having any service potential are 100% expensed at the time of the assessment.

The costs of programs produced for Radio and ABC International are expensed as incurred. Such programs are normally broadcast soon after production, stock on hand at any time being minimal. Refer to Note 6D Inventories regarding inventory valuation.

Finance Costs

All borrowing costs are expensed as incurred.

Interest costs on the liability attributable to right-of-use assets

Interest is calculated on the monthly outstanding balance of the lease liability (refer Note 8B Lease liability).

Assumptions surrounding uncertainty - Interest costs on the liability attributable to right-of-use assets

The valuation of the lease liability is influenced by the discount rate, as advised, on a quarterly basis, by the Commonwealth Department of Finance. The carrying balance of this item is reviewed regularly and an assessment is made of the potential impact of a change in discount rates on this balance. The corresponding interest charged on the outstanding balance is a function of the incremental borrowing cost derived from the discount rate.

Given the large balance as per Note 8B Lease liability, the ABC’s financial performance is sensitive to movements in the incremental borrowing rate.

Impairment loss on financial instruments

Under AASB 9 Financial Instruments, impairment of financial assets is provided for on the basis of future expected credit losses (ECLs) rather than as and when existing debts are deemed to be impaired.

It also allows for the expectation of credit losses to be adjusted in response to certain factors, for example prevailing or anticipated market conditions.

Write-down and impairment of other assets

Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment is made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the Corporation were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

At 30 June 2020, the Corporation had performed and was continuing to perform assessments to determine the extent of any indications that assets may be impaired and the resultant financial impact has been incorporated in the financial statements.

4. Own-Source Income

Recognition and measurement

Disaggregation of revenue from contracts with customers

Royalties

Royalty income arising from sales and usage-based royalties are recognised at the later of when the subsequent sales or usage occurs, or the performance obligation has been satisfied. Therefore, royalty income is recognised at a ‘point in time’.

Content sales

Licence fees from program content are recognised on the latter of the start of the licence period (taking into account any holdback dates) or when the ABC’s performance obligations have been satisfied. For content sales the performance obligation will generally be to deliver the associated program to the customer, therefore income is recognised ‘episodically’ – on delivery of each episode.

Joint Operations

Revenue attributable to joint operations represents the ABC’s 50% share of MediaHub’s revenue. This revenue comprises services fees recognised ‘over time’ as the services (predominantly for broadcast presentation and playout) are provided.

Upon implementation of AASB 15 Revenue from Contracts with Customers, the classification of revenue disaggregation were reviewed and certain reclassifications were made to comparative disclosures to enhance presentation. Revenue from Joint Operations of $11,219,000 (2019 $11,037,000) which was previously classified as Other Revenue is now classified as Rendering of services.

Grants and Services Contracts

Revenue for grants and services contracts with specific performance obligations (primarily for international aid and development projects) is recognised ‘over time’ as services are provided, on an expense reimbursement or on a stage of completion basis. Pursuant to AASB 1058 Income for Not-for-Profit Entities, Grants from Government departments without specific performance obligations are recognised as income in the financial year that they relate to.

Co-productions

Co-production income is recognised on delivery of the related materials or on a stage of completion basis, depending on the nature of the contract with the customer.

Other Contract Revenue

Other contract revenue includes items such as commissions and distribution fees which are recognised at the later of when the subsequent sales or usage occurs.

Interest Revenue

Interest income is recognised as it accrues using the effective interest method and if not received at balance date, is reflected in the Statement of Financial Position as a receivable.

Other revenue

Other revenue largely comprises revenue from lease or hire of ABC owned or controlled facilities. Rental income from the lease of ABC owned or controlled premises is recognised as lease income under AASB 16 Leases and disclosed separately to other revenue from customers disclosed under AASB 15 Revenue from Contracts with Customers.

Gains or losses on disposal of assets

Gains or losses from disposal of assets are recognised when control of the asset has passed to the buyer.

Foreign currency transactions

The Corporation enters into foreign currency hedging arrangements to protect its purchasing power in relation to foreign currency exposures. Revenues and expenditures denominated in foreign currencies are converted to Australian dollars at the exchange rates prevailing at the date of the transaction or at the hedged rate.

All gains and losses are taken to surplus/(deficit).

Operating lease revenue commitments

These commitments, largely relating to rental income for letting out office space, are GST inclusive where relevant. GST payable to the ATO is disclosed separately.

Lease terms are typically between 1 to 5 years in duration and income is subject to increases in accordance with CPI or other agreed increment.

Operating lease revenue is earned via leasing of spare capacity within the ABC’s properties and resources. The ABC leases out spare capacity only on assets it controls. There are no rights-related risks associated with the underlying assets that are being leased.