ANNUAL REPORT - Northern Health

Note 1: Statement of Significant Accounting Policies
Notes To and Forming Part of the Financial Statements
Northern Health Annual Report 2009/2010
(y) Finance Costs
Finance costs are recognised as expenses in the period in which they are incurred.
Finance costs include:
interest on bank overdrafts and short-term and long-term borrowings;
amortisation of discounts or premiums relating to borrowings;
amortisation of ancillary costs incurred in connection with the arrangement of borrowings; and
finance charges in respect of finance leases recognised in accordance with AASB 117 Leases .
(z) Residential Aged Care Service
The Northern Health Residential Aged Care Service operations are an integral part of Northern Health and shares its resources. An apportionment of land and buildings has been made based on
floor space. The results of the two operations have been segregated based on actual revenue earned and expenditure incurred by each operation in note 2b to the financial statement.
(aa) Intersegment Transactions
Transactions between segments within Northern Health have been eliminated to reflect the extent of Northern Health's operations as a group.
(ab) Leases
Leases of property, plant and equipment are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Finance Leases
Entity as lessor
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease.
Entity as lessee
Finance leases are recognised as assets and liabilities at amounts equal to the fair value of the lease property or, if lower, the present value of the minimum lease payment, each determined at
the inception of the lease. The lease asset is depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Minimum lease payments are allocated between the
principal component of the lease liability, and the interest expense calculated using the interest rate implicit in the lease, and charged directly to the operating statement.
Operating Leases
Operating lease payments, including any contingent rentals, are recognised as an expense in the operating statement on a straight line basis over the lease term, except where another
systematic basis is more representative of the time pattern of the benefits derived from the use of the leased asset.
(ac) Income Recognition
Income is recognised in accordance with AASB 118 Revenue and is recognised as to the extent it is earned. Unearned income at reporting date is reported as income received in advance.
Amounts disclosed as revenue are, where applicable, net of returns, allowances and duties and taxes.
Government Grants
Grants are recognised as income when the entity gains control of the underlying assets in accordance with AASB 1004 Contributions. For reciprocal grants, Northern Health is deemed to have
assumed control when the performance has occurred under the grant. For non-reciprocal grants, Northern Health is deemed to have assumed control when the grant is received or receivable.
Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant.
Indirect Contributions
– Insurance is recognised as revenue following advice from the Department of Health.
– Long Service Leave (LSL) – Revenue is recognised upon finalisation of movements in LSL liability in line with the arrangements set out in the Metropolitan Health and Aged Care Services
Division Hospital Circular 14/2009.
Patient and Resident Fees
Patient fees are recognised as revenue at the time invoices are raised.
Private Practice Fees
Private practice fees are recognised as revenue at the time invoices are raised.
Northern Health Financial Report Appendix to the 2009 - 2010 Annual Report
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