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JOHN DANIEL HOLDINGS LIMITED AND ITS SUBSIDIARIES
INTEGRATED ANNUAL REPORT 2011
Tax expenses
Current and deferred taxes are recognised as income or
an expense and included in profit or loss for the period,
except to the extent that the tax arises from:
•
a transaction or event which is recognised, in the
same or a different period, to other comprehensive
income, or
•
a business combination.
Current tax and deferred taxes are charged or credited to
other comprehensive income if the tax relates to items
that are credited or charged, in the same or a different
period, to other comprehensive income.
Current tax and deferred taxes are charged or credited
directly to equity if the tax relates to items that are cred-
ited or charged, in the same or a different period, directly
in equity.
1.8 Leases
A lease is classified as a finance lease if it transfers sub-
stantially all the risks and rewards incidental to owner-
ship. A lease is classified as an operating lease if it does
not transfer substantially all the risks and rewards inci-
dental to ownership.
Finance leases – lessee
Finance leases are recognised as assets and liabilities
in the consolidated 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 pay-
ments. The corresponding liability to the lessor is includ-
ed in the consolidated 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 of on
the remaining balance of the liability.
Operating leases – lessee
Operating lease payments are recognised as an expense
on a straight-line basis over the lease term. The differ-
ence between the amounts recognised as an expense
and the contractual payments are recognised as an op-
erating lease asset. This liability is not discounted.
Any contingent rents are expensed in the period they are
incurred.
1.9 Inventories
Inventories are measured at the lower of cost and net re-
alisable value.
Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make
the sale.
The cost of inventories comprises of all costs of purchase,
costs of conversion and other costs incurred in bringing
the inventories to their present location and condition.
The cost of inventories of items that are not ordinarily
interchangeable and goods or services produced and
segregated for specific projects is assigned using specific
identification of the individual costs.
The cost of inventories is assigned using the first-in, first-
out (FIFO) formula. The same cost formula is used for all
inventories having a similar nature and use to the entity.
When inventories are sold, the carrying amount of those
inventories are recognised as an expense in the period in
which the related revenue is recognised. The amount of
any write-down of inventories to net realisable value and
all losses of inventories are recognised as an expense in
Accounting Policies -
Continued
Annual Financial Statements for the 15 months ended 30 September 2011