RACING AUSTRALIA ANNUAL REPORT 2021 43 Rendering of services Rendering of services revenue from publishing services, owners and breeders’ services, trainer and racing services, digital services and technical services is recognised when it is received or when the right to receive payment is established. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset at the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. (i) Impairment of non-financial assets Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an assets fair value less the cost of disposal and value-in-use. The valuein-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cashgenerating unit. ( j) Intangible assets – computer software and databases Computer software and databases are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over its estimated useful life being 3 years. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period. The investment in the Single National System software and database is recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over its estimated useful life being 5 years. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period. Intangible assets – Australian Stud Book The Australian Stud Book is recorded at cost and is subject to annual impairment testing. The Directors consider that the Australian Stud Book has an indefinite life and as a result, has not been amortised. (k) Non-Repayable Grants to Principal Racing Authorities (PRAs) Under the terms of the company constitution, net surplus and the ongoing retained surpluses of the company cannot be distributed as dividends to the participating Principal Racing Authorities (PRAs). The company may pay to each Principal Racing Authority (or set off in accordance with the Participation Agreement) a proportion of any surplus calculated in accordance with the constitution by way of a non repayable grant. Such distributions to PRAs are classified as expenses within the Statement of Profit or Loss and other comprehensive income. (l) New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the consolidated entity: AASB 16 Leases The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 ‘Leases’ and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021
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