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Wool Stocktake : AWI Annual Report 2016-17
NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 2017 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Australian Wool Innovation Limited is a company limited by shares, incorporated and domiciled in Australia and is a not- for-profit company. The nature of the Group's operations and principal activities are described in the Directors' Report. The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Australian Wool Innovation Limited and its subsidiaries. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Australian Wool Innovation Limited is a not-for-profit entity for the purpose of preparing the financial statements. (i) Compliance with Australian Accounting Standards Reduced Disclosure Requirements The consolidated financial statements of the Australian Wool Innovation Limited Group comply with Australian Accounting Standards Reduced Disclosure Requirements as issued by the Australian Accounting Standards Board (AASB). (ii) Historical cost convention This financial report has been prepared under the historical cost convention. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year. Comparative information is reclassified where appropriate to enhance comparability. (iii) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (1) Estimated impairment of the Woolmark certification trademarks The Group tests annually whether the value of $10,000,000 allocated to the Woolmark certification trademarks has suffered any impairment, in accordance with the accounting policy stated in note 1(h). These calculations require the use of assumptions regarding the separately identifiable future cash inflows relating to the brand, estimates of future costs required to support the brand and discount rates. Management determined budgeted cash flows based on license fees billed for the coming year and budgeted costs based on past performance and expectations for the future. (iv) New standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below: AASB 9 financial instruments AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. The Group does not expect any impact from the new classification, measurement and derecognition rules on the company's financial assets and financial liabilities. The new standard must be applied for financial years commencing on or after 1 January 2018. The Group does not intend to adopt AASB 9 before its mandatory date. AASB 15 revenue from contracts with customers The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers revenue arising from the sale of goods and the rendering of services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption. The Group does not expect any impact from new revenue recognition standard as its major revenue streams are from wool levy and government contribution that are paid by the government. The new standard must be applied for financial years commencing on or after 1 January 2018. The Group does not intend to adopt AASB 15 before its mandatory date. FINANCIAL REPORT 69
AWI Annual Report 2015-16