Broome Port Authority - Parliament of Western Australia

All impairment losses are recognised in profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after
the impairment loss was recognised. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had been recognised.
i) Leases
Leases in which the Authority assumes substantially all the risks and rewards of ownership are
classified as finance leases. Upon initial recognition the leased asset is measured at an amount
equal to the lower of its fair value and the present value of the minimum lease payments.
Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy
applicable to that asset.
Other leases are operating leases and the leased assets are not recognised on the Authority’s
balance sheet.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over
the term of the lease. Lease incentives received are recognised as an integral part of the total lease
expense, over the term of the lease.
Mini mum lease payments made under finance leases are apportioned between the finance expense
and the reduction of the outstanding liability. The finance expense is allocated to each period during
the lease term so as to produce a constant periodic rate of interest on the remaining balance of the
liability. Contingent lease payments are accounted for by revising the minimum lease payments over
the remaining term of the lease when the lease adjustment is confirmed.
j) Financial instruments
In addition to cash, the Authority has two categories of financial instruments:
1. Loans a nd receivables;
2. Financial liabilities measured at amortised cost.
Refer to Note 22( ii) for further information on the classification of financial instruments.
Initial recognition and measurement is at fair value. The transaction cost or face value is equivalent
to the fair value. Subsequent measurement is at amortised cost using the effective interest method.
The fair value of short-term receivables and payables is the transaction cost or the face value
because there is no interest rate applicable and subsequent measurement is not required as the
effect of discounting is not material.
k) Payables
Payables, including trade creditors, amounts payable and accrued expenses, are recognised for
amounts to be paid in the future for goods and services received prior to the reporting date. The
carrying amount is equivalent to fair value, as they are generally settled within 30 days.
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