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Notes - Managing Uncertainties Cont'd.

Wreck Bay Aboriginal Community Council

ABN: 62 564 797 956

Notes to and forming part of the financial statements

for the period ended 30 June 2020

Accounting Policy

Financial assets

Financial assets at FVTPL are stated at fair value, with any

With the implementation of AASB 9 Financial Instruments for

resultant gain or loss recognised in profit or loss. The net gain

the first time in 2019, Council classifies its financial assets in

or loss recognised in profit or loss incorporates any interest

the following categories:

earned on the financial asset.

a) financial assets at fair value through profit or loss:

b) financial assets at fair value through other comprehensive

Impairment of Financial Assets

income; and

Financial assets are assessed for impairment at the end of each

c) financial assets at amortised cost.

reporting period based on Expected Credit Losses, using the

The classification depends on both Council's business model

general approach which measures the loss allowance based on

for managing the financial assets and contractual cash flow

an amount equal to lifetime expected credit losses where risk

characteristics at the time of the initial recognition. Financial

has significantly increased, or an amount equal to 12-month

assets are recognised when Council becomes a party to the

expected credit losses if risk has not increased.

contract and, as a consequence, has a legal right to receive or a

legal obligation to pay cash and derecognised when the

The simplified approach for trade, contract and lease

contractual rights to the cash flows from the financial asset

receivables is used. This approach always measures the loss

expire or are transferred upon trade date.

allowance as the amount equal to the lifetime expected credit

losses.

Comparatives have not been restated on initial application.

A write-off constitutes a derecognition event where the write-

Financial Assets at Amortised Cost

off directly reduces the gross carrying amount of the financial

Financial assets included in this category need to meet two

asset.

criteria:

1. the financial asset is held in order to collect the contractual

Financial liabilities

cash flows; and

Financial liabilities are classified as either financial liabilities

2. the cash flows are solely payments of principal and interest

'at fair value through profit or loss' or other financial liabilities.

(SPPI) on the principal outstanding amount.

Financial liabilities are recognised and derecognised upon

'trade' date.

Amortised cost is determined using the effective interest

method.

Financial liabilities at Fair Value Through Profit or Loss

Financial liabilities at fair value through profit or loss are

Effective Interest Method

initially measured at fair value. Subsequent fair value

Income is recognised on an effective interest rate basis for

adjustments are recognised in profit or loss. The net gain or

financial assets that are recognised at amortised cost.

loss recognised in profit or loss incorporates any interest paid

on the financial liability.

Financial Assets at Fair Value Through Other Comprehensive

Income (FVOCI)

Financial Liabilities at Amortised Cost

Financial liabilities, including borrowings, are initially

Financial assets measured at fair value through other

measured at fair value, net of transaction costs. These

comprehensive income are held with the objective of both

liabilities are subsequently measured at amortised cost using

collecting contractual cash flows and selling the financial

the effective interest method, with interest expense recognised

assets and the cash flows meet the SPPI test.

on an effective interest basis.

Any gains or losses as a result of fair value measurement of the

Supplier and other payables are recognised at amortised cost.

recognition of an impairment loss allowance is recognised in

Liabilities are recognised to the extent that the goods or

other comprehensive income.

services have been received (and irrespective of having been

invoiced).

Financial Assets at Fair Value Through Profit or Loss (FVTPL)

Financial assets are classified as financial assets at fair value

through profit or loss where the financial assets either doesn't

meet the criteria of financial assets held at amortised cost or at

FVOCI (i.e. mandatorily held at FVTPL) or may be designated.