Page 135 - Suncorp_Review

Suncorp Group Limited Annual Report 2010/11 133

A defned beneft liability is recognised in the consolidated statement of fnancial position as a net total of the present value of the defned beneft obligation at the balance date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs.

If the defned beneft liability resulted in negative balance, a defned beneft asset is recognised as the lower of the negative defned beneft liability and the total of cumulative unrecognised net actuarial losses and past service costs and the present value of any economic benefts available in the form of refunds from the plan or reductions in future contributions to the plan.

Actuarial gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised directly to equity. Past service costs are recognised immediately in proft or loss.

(b) Short-term employee benefts

Liabilities for employee benefts are those expected to be paid within 12 months of providing service and are measured at their nominal amounts using pay rates expected to be effective when the liability is to be paid. Related on-costs such as workers’ compensation and payroll tax are also included in the liability.

A liability is recognised for short-term bonus plans when there is a constructive obligation to pay this amount and the amount can be reliably estimated. (c) Long service leave

A liability for long service leave is recognised as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using Commonwealth Government bond rates with terms to maturity that match, as closely as possible, the estimated future cash outfows. Related on-costs such as workers’ compensation and payroll tax are also included in the liability. (d) Termination benefts

Termination benefts are payable when employment is terminated before the normal retirement date, or whenever an employee accepts a voluntary redundancy in exchange for these benefts. The Suncorp Group recognises termination benefts when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefts as a result of an offer made to encourage voluntary redundancy.

33.1.21 Share capital

(a) Repurchase of share capital

When share capital is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from total equity. (b) Treasury shares

Ordinary shares of the Company that are acquired by subsidiaries including share-based remuneration trusts and controlled unit trusts are referred to as treasury shares. They are deducted from consolidated equity at the amount of the consideration paid. No gain or loss on treasury shares is recognised. (c) Transaction costs

Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax beneft. Transaction costs in excess of the proceeds of the equity instruments issued, or where no proceeds are raised, are recognised as an expense.

33.1.22 Contingent liabilities and contingent assets

Contingent liabilities are not recognised but are disclosed in the fnancial report, unless the possibility of settlement is remote, in which case no disclosure is made. If settlement becomes probable and the amount can be reliably estimated, a provision is recognised.

Contingent assets are not recognised but are disclosed in the fnancial report when infows are probable. If infows become virtually certain, an asset is recognised.

The amount disclosed as a contingent liability or contingent asset is the best estimate of the settlement or infow.

33.2 Signifcant accounting policies specifcally applicable to General Insurance

33.2.1 General Insurance revenue and expense recognition

(a) Premium revenue

Premium revenue comprises amounts charged to policyowners and includes applicable levies and charges such as fre service levies but excludes stamp duty and taxes collected on behalf of third parties such as GST. Premiums are recognised as revenue in accordance with the pattern of the underlying risk exposure from the date of attachment over the period of the insurance policy, which is usually one year.

Premiums on unclosed business are brought to account by reference to the prior year’s experience and information that has become available between the reporting date and the date of completing the fnancial report.