Racing Australia Annual Report 2020

RACING AUSTRALIA ANNUAL REPORT 2020 | 45 of Financial Position represents the present value of the defined benefit obligation, adjusted for unrecognised post service cost, net of the fair value of the plan assets. Any asset resulting from this calculation is limited to post service cost, plus the present value of available funds and reductions in future contributions to the plan. Racing Victoria has agreed in writing dated 8 December 2008 to indemnify Racing Australia Limited in respect of any unfunded liabilities in the defined benefits fund that are incurred and payable by Racing Australia Limited in relation to defined benefits member employees. (g) Goods and services tax Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except: (i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or (ii) for receivables and payables which are recognised inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables. Cash flows are included in the statement of cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows. (h) Revenue Recognition Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Sale of goods Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery of the goods, the risk and rewards are transferred to the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns and trade discounts. 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 value-in-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 cash-generating 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 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020