AS AT 30 JUNE 2011
54
Notes to the Financial Statements (continued)
1. Summary of signifcant accounting policies
(continued)
The excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest
in the acquiree over the fair value of the Group’s share
of the net identifable assets acquired is recorded as
goodwill. If those amounts are less than the fair value
of the net identifable assets of the subsidiary acquired
and the measurement of all amounts has been reviewed,
the diference is recognised directly in proft or loss as a
bargain purchase.
Where settlement of any part of cash consideration is
deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The
discount rate used is the entity’s incremental borrowing
rate, being the rate at which a similar borrowing could be
obtained from an independent fnancier under comparable
terms and conditions.
Contingent consideration is classifed either as equity or
a fnancial liability. Amounts classifed as a fnancial liability
are subsequently remeasured to fair value with changes
in fair value recognised in proft or loss.
i. Lease receivables – Group is lessor
The Group has classifed its leases as fnance leases for
accounting purposes. Under a fnance lease, substantially
all the risks and benefts incidental to the ownership of the
leased asset are transferred by the lessor to the lessee.
The Group recognises at the beginning of the lease term
an asset at an amount equal to the aggregate of the present
value (discounted at the interest rate implicit in the lease)
of the minimum lease payments and an estimate of the value
of any unguaranteed residual value expected to accrue to
the beneft of the Group at the end of the lease term.
i. Unearned interest
Unearned interest on leases and other receivables is brought
to account over the life of the lease contract based on the
interest rate implicit in the lease.
ii. Initial direct transaction costs
Initial direct costs (leases) or transaction costs (loans)
incurred in the origination of leases and loans are included
as part of receivables in the balance sheet and are amortised
in the calculation of lease income and interest income.
j. Loan receivables
Loan receivables are non-derivative fnancial assets with
fxed or determinable payments that are not quoted in an
active market. They arise when the Group provides loans
to customers via products such as personal loans and
Certegy Ezi-pay.
k. Allowance for losses
The collectability of lease and loan receivables is assessed
on an ongoing basis. A provision is made for losses based
on historical roll rates of arrears and the current delinquency
position of the portfolio.
l. Trade receivables
Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost, using the
efective interest rate method, less provision for impairment.
Trade receivables are generally due for settlement within
30 days. They are presented as current assets unless
collection is not expected for more than 12 months after
the reporting date.
Collectability of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are written
of by reducing the carrying amount directly. An allowance
account (provision for impairment of trade receivables)
is used when there is objective evidence that the Group
will not be able to collect all amounts due according to
the original terms of the receivables. Signifcant fnancial
difculties of the debtor, probability that the debtor will
enter bankruptcy or fnancial reorganisation, and default or
delinquency in payments (more than 60 days overdue) are
considered indicators that the trade receivable is impaired.
The amount of the impairment allowance is the diference
between the asset’s carrying amount and the present value
of estimated future cash fows, discounted at the original
efective interest rate. Cash fows relating to short-term
receivables are not discounted if the efect of discounting
is immaterial.
The amount of the impairment loss is recognised in the
income statement. When a trade receivable for which an
impairment allowance had been recognised becomes
uncollectible in a subsequent period, it is written of against
the allowance account.
m. Leases – used by the Group
Leases of property, plant and equipment where the Group
has substantially all the risks and rewards of ownership are
classifed as fnance leases. Finance leases are capitalised
at the lease’s inception at the lower of the fair value of the
leased property or the present value of the minimum lease
payments. The corresponding rental obligations, net of
fnance charges, are included in other long-term payables.
Each lease payment is allocated between the liability and
fnance cost. The fnance cost is charged to the income
statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the
liability for each period. The property, plant and equipment
acquired under fnance leases are depreciated over the
shorter of the asset’s useful life and the lease term.