Umsobomvu Youth Fund Annual Report 2006 - Nyda

of the joint venture. These joint ventures do not involve theestablishment of a corporation, partnership or other entityor a financial structure that is separate from the venturersthemselves. Each venturer has control over its share of futureeconomic benefit through its share of the jointly controlledasset.The Fund recognises in its financial statements:• Its share of the jointly controlled assets and liabilities, classifiedaccording to the nature of the assets and liabilities;• Any income from the sale or use of its share of the output ofthe jointly controlled asset; and• Its share of any expenses incurred by the joint venture andany expense that it has incurred in respect of its interest inthe jointly controlled assets.1.6 Investments in jointly controlled entitiesA jointly controlled entity is a joint venture that involves theestablishment of an entity in which each venturer has aninterest. The entity operates in the same way as other entities,except that a contractual arrangement between the venturersestablishes joint control over the economic activity of the entity.The interest in such an entity is accounted for by the equitymethod of accounting.The ranges of rates used are as follows:Computer hardware 20% – 33% per annumComputer software 20% – 33% per annumOffice equipment 20% – 33% per annumFurniture17% – 25% per annumMotor vehicles17% – 20% per annumLeasehold improvements Over the remaining term of the lease1.9 Intangible assetsIntangible assets acquired separately are measured on initialrecognition at cost. Following initial recognition, intangibleassets are carried at cost less any accumulated amortisation andany accumulated impairment losses. The internally generatedand externally acquired intangible assets are capitalised andhave finite useful lives. The useful life and the amortisationmethod for an intangible asset are reviewed at least at eachfinancial year-end.Internally developed intangible assets are capitalised only whenit is technically feasible to complete the intangible asset so thatit will be available for use, and the intention to complete andability to use can be demonstrated taking into account how theasset will generate future economic benefits, the availabilityof resources to complete, and the ability to reliably measureexpenditure during development.balancesheetsat 31 March 20061.7 Group accountsThe consolidated financial statements comprise the financialstatements of Umsobomvu Youth Fund, its subsidiaries andjoint ventures. Subsidiary companies are those in which theFund, directly or indirectly, has an interest of more than half ofthe voting rights or otherwise has power to exercise control overthe operations. Subsidiary companies are consolidated from thedate on which effective control is transferred to the Group andcease to be consolidated when the investment is disposed ofor the Fund no longer has control as described above. All intercompanytransactions, balances and unrealised surpluses anddeficits on transactions between Group companies have beeneliminated. The investment in subsidiary is measured at cost.1.8 Property, plant and equipmentProperty, plant and equipment are stated at cost, excludingthe cost of day-to-day servicing, less accumulated depreciationand accumulated impairment in value. Property, plant andequipment are depreciated over their expected useful lives on astraight line basis at rates estimated to write each asset downto estimated residual value over the term of its useful life.An item of property, plant and equipment is derecognised upondisposal or when no future economic benefits are expected fromits use or disposal. Any gain or loss arising on derecognitionof the asset is included in the income statement in the yearthe asset is derecognised. The asset’s residual values, usefullives and depreciation methods are reviewed, and adjusted ifappropriate, at each financial year-end.The Fund amortises its intangible assets at a rate of between20% – 33% per annum. Software under development isamortised when the software becomes available for use.1.10 Impairment of assetsThe Fund regularly reviews its assets for indications ofimpairment, and accounts for impairment or reversals ofprior impairment in accordance with the provisions of IAS 36:Impairment of Assets. Where the carrying amount is greaterthan its recoverable amount it is written down immediately toits recoverable amount. The recoverable amount is the higherof an asset’s net selling price and its value in use. In assessingvalue in use, the estimated future cash flow is discounted to itspresent value using a discount rate that reflects current marketassessments of the time value of money and the risk specificto the asset.1.11 Government grantsOn initial recognition, Government grants are presentedas deferred income in line with the requirements of IAS 20:Accounting for Government Grants and Disclosure of GovernmentAssistance. Subsequent to initial recognition, Governmentgrants are recognised as income on a systematic and rationalbasis over the periods necessary to match them with the relatedcosts, being the project disbursement costs.Government grants not yet disbursed are allocated betweencommitted and uncommitted, restricted and unrestricted funds.Committed funds represent the portion of the deferred grantincome that has been contractually committed to projects,but not yet drawn or disbursed as at balance sheet date.Uncommitted and restricted funds are reserves that cannot beUmsobomvu Youth Fund 2006 Financial Statements51