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AFRICAN DAWN Annual Report 2016

Accounting Policies continued Finance leases – lessee Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum lease payments, is the interest rate implicit in the lease. The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability. Operating leases - lessor Rental income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term. The difference between the amounts recognised as income and the contractual amounts are recognised as an operating lease asset. This asset is not discounted. Any contingent rents are recognised in the period they are incurred by the lessee. Afdawn Group is a lessor on operating leases related to properties in possession (refer to note 1.14 and 9). All leases are for a maximum of 1 year and are subject to annual renegotiation therefore there is no operating lease asset. Operating leases – lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease liability. This liability is not discounted. Any contingent rents are expensed in the period they are incurred. 1.7 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognise in profit or loss in the period in which they are incurred. 1.8 Employee benefits Short-term employee benefits The Group provides only short-term employee benefits. There are no post retirement employee benefits. The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance. 1.9 Tax expense The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. Current taxation Current taxation is the expected tax payable on the taxable income for the year, using taxation rates enacted or substantively enacted at the reporting date, and any adjustment to taxation payable in respect of previous years (prior- period tax paid). Deferred tax Deferred taxation is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. 40 AFRICAN DAWN ANNUAL REPORT 2016


AFRICAN DAWN Annual Report 2016
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