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Notes to the Financial Statementsof the transaction. Exchange rate differences are recognised in thestatement of comprehensive income in the period in which they arise.Goods and Services TaxAll items in the financial statements are stated exclusive of goods andservices tax (GST), except for trade and other receivables and tradeand other payables, which are presented on a GST-inclusive basis.Where GST is not recoverable as input tax then it is recognised as partof the related asset or expense.The net amount of GST recoverable from, or payable to InlandRevenue is included as part of receivables or payables in the balancesheet.The net GST paid to, or received from Inland Revenue, including theGST relating to investing and financing activities, is classified as a netoperating cash flow in the statement of cash flows.Commitments and contingencies are disclosed exclusive of GST.Impairment of AssetsAt each balance date, WelTec and Group assesses whether thereis any objective evidence that a financial asset or group of financialassets is impaired. Any impairment losses are recognised in the profitor loss.Loans and receivablesImpairment of a loan or a receivable is established when there isobjective evidence that WelTec and Group will not be able to collectamounts due. Significant financial difficulties of the debtor, probabilitythat the debtor will enter into liquidation or default on payments areconsidered indicators that the asset is impaired.For debtors and other receivables the carrying amount of the asset isreduced through the use of an allowance account, and the amountof the loss is recognised in the profit or loss. When the receivable isuncollectable, it is written off against the allowance account. Overduereceivables that have been renegotiated are reclassified as current(that is, not past due).Other Financial Assets, Property, Plant and EquipmentIf any indication of impairment exists, the recoverable amount of theasset is estimated in order to determine the extent of the impairmentloss (if any). Where the asset does not generate cash flows that areindependent from other assets, the recoverable amount from thecash-generating unit to which the asset belongs is estimated.Recoverable amount is the higher of fair value less costs to sell andvalue in use. In assessing value in use, the estimated future cashflows are discounted to their present value, using a discount rate thatreflects current market assessments of the time value of money.If an asset’s carrying amount exceeds its recoverable amount, the assetis impaired and the carrying amount is written-down to the recoverableamount. For revalued assets the impairment loss is recognised inother comprehensive income to the extent the impairment loss doesnot exceed the amount in the appropriate revaluation reserve. Wherethat results in a debit balance in the revaluation reserve, the balance isrecognised in the profit or loss.For assets not carried at a revalued amount, the total impairment lossis recognised in the profit or loss.The reversal of an impairment loss on a revalued asset is credited toother comprehensive income and increases the applicable revaluationreserve, unless an impairment loss was previously recognised in theprofit or loss, in which case the reversal of the impairment loss is alsorecognised in the profit or loss.For assets not carried at revalued amount the reversal of an impairmentloss is recognised in the profit or loss.Intangible AssetsIntellectual property costsDevelopment costs for new intellectual property internally developedor acquired which have a benefit of more than 1 year have beencapitalised. Such costs are expected to be recovered, and areamortised on a straight-line basis over the period of their expecteduseful lives, being 3 years.SoftwareAll software purchased or created by WelTec and Group which havea benefit of more than 1 year have been capitalised. Such costs areexpected to be recovered, and are amortised on a straight-line basisover the period of their expected useful lives, being 3 years.Assets under constructionCourse development and software assets under construction aretreated as an intangible asset until completion. Upon completion of aproject, the total cost is transferred to the appropriate asset class, atwhich point amortisation begins.InventoriesInventories available for resale are valued at the lower of cost and netrealisable value. Consumables are recorded at cost.InvestmentsInvestments are initially recognised at cost, being the fair value of theconsideration given. After the initial recognition, investments which areclassified as available-for-sale are measured at fair value. Investmentsthat are intended to be held-to-maturity are subsequently measuredat amortised cost using the effective interest method. Amortisedcost is calculated by taking into account any discount or premiumon acquisition, over the period to maturity. Any changes in fair valuethroughout the term of the investment are recognised within thestatement of comprehensive income.Leased AssetsOperating lease payments, where the lessor effectively retainssubstantially all the risks and rewards of ownership of the leaseditems, are recognised as an expense on a straight-line basis over thelease term.PayablesTrade payables and other accounts payable are recognised whenWelTec and Group becomes obliged to make future paymentsresulting from the purchase of goods and services.Other Financial AssetsFinancial assets are initially recognised at fair value. Financial assetsare derecognised when the rights to receive cash flows from thefinancial assets have expired or have been transferred and WelTecand the Group has transferred substantially all the risks and rewardsof ownership.Financial assets are classified into the following categories for thepurposes of measurement:• Loans and receivablesLoans and receivables are non-derivative financial assets with fixedor determinable payments that are not quoted in an active market.Related party receivables that are repayable on demand are classifiedas a non-current asset because repayment of the receivable is notexpected within 12 months of balance date.64 | WELLINGTON INSTITUTE OF TECHNOLOGY