ANNUAL REPORT 2017/18 35
NOTES TO THE FINANCIAL STATEMENTS
31 March 2018
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
2.11 Financial assets
(continued)
(e) Impairment
(continued)
Loans and receivables
Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy, and
default or significant delay in payments are objective
evidence that these financial assets are impaired.
The carrying amount of these assets is reduced
through the use of an impairment allowance account
which is calculated as the difference between the
carrying amount and the present value of estimated
future cash flows, discounted at the original effective
interest rate.
When the asset becomes uncollectible, it is written
off against the allowance account. Subsequent
recoveries of amounts previously written off are
recognised against the same line item in income
and expenditure. The impairment allowance is
reduced through income and expenditure in a
subsequent period when the amount of impairment
loss decreases and the related decrease can be
objectively measured. The carrying amount of the
asset previously impaired is increased to the extent
that the new carrying amount does not exceed the
amortised cost had no impairment been recognised
in prior periods.
2.12 Fees received in advance
Fees received in advance represents tuition fees received
in advance for the next financial year.
2.13 Derivative financial instruments
A derivative financial instrument is initially recognised at
its fair value on the date of the contract is entered into
and is subsequently carried at its fair value.
Fair value changes on derivatives are recognised in the
income and expenditure when the changes arise. The fair
value of a trading derivative is presented as current asset
or liability.
2.14 Other payables
Other payables represent liabilities for goods and services
provided to the University prior to the end of financial
year which are unpaid. They are classified as current
liabilities if payment is due within one year or less (or in
the normal operating cycle of the business, if longer). If
not, they are presented as non-current liabilities.
Other payables are initially recognised at fair value,
and subsequently carried at amortised cost using the
effective interest method.
The University derecognises other payables when its
contractual obligations are discharged or cancelled or expired.
2.15 Borrowings
Borrowings are presented as current liabilities unless the
University has an unconditional right to defer settlement
for at least 12 months after the balance sheet date, in
which case they are presented as non-current liabilities.
Borrowings are initially recognised at fair value (net
of transaction costs) and subsequently carried at
amortised cost. Any difference between the proceeds
(net of transaction costs) and the redemption value is
recognised in income and expenditure over the period
of the borrowings using the effective interest method.
2.16 Cash and cash equivalents
For the purpose of presentation in the statement of cash
flows, cash and cash equivalents include cash on hand
and deposits with financial institutions which are subject
to an insignificant risk of change in value.
2.17 Borrowing costs
Borrowing costs are recognised in income and
expenditure using the effective interest method except
for those costs that are directly attributable to assets under
construction. This includes those costs on borrowings
acquired specifically for assets under construction, as
well as those in relation to general borrowings used to
assets under construction.
The actual borrowing costs incurred during the period up
to the issuance of the temporary occupation permit are
capitalised in the cost of the assets under construction.
