Broome Port Authority - Parliament of Western Australia

2. Summary of significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in
these financial statements unless otherwise stated.
Certain comparative amounts have been reclassified to conform with the current year’s presentation
[see note 1(b)].
a)
Revenue recognition
Revenue is measured at the fair value of consideration received or receivable. Revenue is
recognised for the major business activities as follows:
(i) Rendering of services
Revenue from services rendered is recognised in profit or loss in proportion to the stage of
completion of the transaction at the reporting date. Where the contract outcome cannot be
measured reliably, revenue is recognised only to the extent of the expenses recognised that are
recoverable.
(ii) Interest
Interest revenue is recognised as it accrues using the effective interest method [see note 2(b)].
(iii) Rental income
Rental income is recognised in the income statement on a straight-line basis over the term of the
lease. Lease incentives granted are recognised as an integral part of the total rental income.
b) Finance income and expenses
Finance income comprises interest income on funds invested and interest receivable from debtors.
Interest income is recognised as it accrues in profit or loss using the effective interest method.
Finance expenses comprise interest expense on borrowing and finance charges payable under
finance leases. All borrowing costs are recognised in profit or loss using the effective interest
method. The interest expense component of finance lease payments is also recognised in the
income statement using the effective interest rate method.
In determining the amount of borrowing costs to be capitalised during the financial year, investment
revenue earned directly relating to borrowings, is deducted from the borrowing costs incurred.
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit
or loss except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted
or substantially enacted at the reporting date and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is not recognised on the initial recognition of
assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit/loss.
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