AUSTRALIAN ANIMAL HEALTH COUNCIL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Equity accounting Although AHA holds 51 percent of Livestock Biosecurity Network Pty Ltd shares and has significant influence, AHA does not have ‘control’. The investment in LBN is therefore equity accounted (refer to note 9). Significant influence is the power to participate in the financial and operating policy decisions of the investee but it is not control over those policies. The results and assets and liabilities of associates are incorporated in the financial statements using the equity method of accounting. The equity investment is initially recorded at cost and subsequently adjusted to reflect the investor’s share of the net assets of the associate (investee). (q) New Accounting Standards AASB 15 Revenue from contracts with customers This standard is applicable to annual reporting periods beginning on or after 1 January 2019 for not-for-profit entities. Replaces all existing standards on revenue, and establishes a fivestep process for revenue recognition: • Identify the contract with a customer • Identify the performance obligations in the contract • Determine the transaction price • Allocate the transaction price to the performance obligations • Recognise revenue when the performance AHA currently accounts for project revenue in line with performance obligations and therefore does not foreshadow a significant implementation challenge, nor a greater deferral of revenue. AASB 16 Leases This standard is applicable to annual reporting periods beginning on or after 1 January 2019. A comprehensively revamped lease accounting model, which largely ends the previous distinction between operating and finance leases: • All leases greater than 12 months must be recognised on balance sheet as a lease liability and a related right to use asset, based on the present value of future lease payments. • A new requirement to consider renewal options which are reasonably likely to be exercised when calculating the lease term. • The expenses related to leases will appear in the income statement as interest on the lease liability and depreciation on the right-to-use asset – not as a rental expense. • No significant change for accounting by lessors AHA will be impacted by this standard in particular for the lease of its premises in Turner. AASB 1058 Income of Not-for-Profit Entities This standard is applicable to annual reporting periods beginning on or after 1 January 2019. Substantially alters the requirements of the existing AASB 1004 Contributions and clarifies the treatment of the receipt of income by not-for-profit entities. Income where there is an associated performance obligation should be recognised in line with the principles of AASB 15, whereas donations with no future obligation may be recognised immediately. In addition, assets or services received at below market value (such as peppercorn leases) must be recognised at fair value. AHA typically has performance obligations for its receipts and is therefore not likely to be impacted by this standard. - 13 - ANNUAL REPORT 2016-17 93
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