Umsobomvu Youth Fund Annual Report 2006 - Nyda

DerecognitionA financial asset is derecognised where:• The rights to receive cash flows from the asset have expired;• The Fund retains the right to receive cash flows from theasset, but has assumed an obligation to pay them in fullwithout material delay to a third party under a “pass through”arrangement; or• The Fund has transferred its right to receive cash flows fromthe asset and either (a) has transferred substantially all therisks and rewards of the asset or (b) has neither transferrednor retained substantially all the risks and rewards of theasset, but has transferred control of the asset.Where the Fund has transferred its rights to receive cashflows from an asset and has neither transferred nor retainedsubstantially all the risks and rewards of the asset nortransferred control of the asset, the asset is recognised tothe extent of the Fund’s continuing involvement of the asset.Continuing involvement that takes a form of a guarantee overthe transferred asset is measured at the lower of the originalcarrying amount of the asset and the maximum amount ofconsideration that the Fund could be required to repay.A financial liability is derecognised when the obligation underthe liability is discharged or cancelled or expires.When an existing financial liability is replaced by another fromthe same lender on substantially different terms, or the termsof the existing liability are substantially modified, such anexchange or modification is treated as a derecognition of theoriginal liability and the recognition of a new liability, and thedifference in the respective carrying amounts is recognised inprofit or loss.1.17 Post employee benefitsThe Fund provides a defined contribution plan for the benefitof all employees in the form of a provident fund. The plan isfunded by the Fund and is charged to the income statementin the same period that the related service is provided.The Provident Fund is governed by the Pension Funds Act, 24of 1956.2 Implementation of IFRSFor the year ended 31 March 2005 the Fund prepared thefinancial statements in accordance with SA GAAP. With effectfrom 1 April 2005 the Fund has adopted IFRS. As the Fundpublishes comparatives for one year in its financial statements,the date of transition to IFRS is effectively 1 April 2004, whichrepresents the start of the earliest period of comparativeinformation presented. The opening balance sheets at 1 April2004 and 1 April 2005 have been restated accordingly.The transition from SA GAAP to IFRS has resulted in thefollowing change in the financial statements:Error in estimatesDuring the year, the Fund reviewed its useful lives and residualvalue in respect of property, plant and equipment and itsamortisation period in respect of intangible assets underSA GAAP which resulted in an error in estimates in the priorperiods. The effect of the error in estimate has been detailedin note 2.1.Effect of transition to IFRSDuring the year, the Fund registered as a venture capitalorganisation. This led to the Fund changing its accountingtreatment in respect of investments in associates from beingequity accounted to being accounted for at fair value throughprofit and loss in accordance with IAS 39 as required byIAS 28.The application of IFRS had no material effect on the cash flowstatement. The effect on reserves resulted in the retrospectiverestatement of the prior year amounts to account for the error inestimates and the fair value adjustment as mentioned above.balancesheetsat 31 March 20061.18 GoodwillGoodwill represents the future economic benefits arising fromassets that are not capable of being individually identifiedand separately recognised in a business combination andis determined as the excess of the cost of acquisition overthe Company’s interest fair value of the identifiable assets,liabilities and contingent liabilities, of the business at the dateof acquisition.Goodwill is recognised as an asset, stated at cost lessimpairment and is not amortised.Umsobomvu Youth Fund 2006 Financial Statements53