NOTES TO THE FINANCIAL STATEMENTS
Impact on Financial Statements
Associates and joint ventures WelTec and Group As at 1 Jan 2014
Year ended 31 Dec 2014
Increase in domestic students tuition funding
Increase/(decrease) in government funding
Net impact on retained earnings Net impact on net profit Impact on net assets/equity: Increase in opening retained earnings
Increase in 2014 net profit Net impact on net assets/equity
Impact on Statement of Financial Position: Increase in receivables
Decrease in income in advance
Net impact on net assets
WelTec's associate and joint venture investments are accounted for in the Group financial statements using the equity method. An associate is an entity over which WelTec has significant influence and that is neither a subsidiary nor an interest in a joint venture. A joint venture is an entity over which Weltec has joint control. The investment is initially recognised at cost and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss of the associate or joint venture after the date of acquisition. The Group’s share of the profit or loss is recognised in the Group profit or loss. Distributions received from an associate or joint venture reduce the carrying amount of the investment in the Group financial statements. If the share of losses of an associate or joint venture equals or exceeds an interest in the associate or joint venture, the Group discontinues recognising its share of further losses. After the Group’s interest is reduced to zero, additional losses are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. If the associate or joint venture subsequently reports profits, the Group will resume recognising its share of those profits only after its share of the profits equals the share of losses not recognised. Where the Group transacts with an associate or joint venture, profit or losses are eliminated to the extent of the Group’s interest in the relevant associate. Investments in associates and joint ventures are carried at cost in the WelTec parent entity financial statements and tested annually for impairment.
Changes in accounting policies
There have been no changes in accounting policies during the financial year other than as noted on the previous page.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to WelTec and Group and the revenue can be reliably measured. The following specific criteria must also be met before revenue is recognised:
Prior period adjustment The accounting cost of a lease arrangement that began in 2014 has been re-assessed during the period. As a consequence of this re-assessment the 2014 Statement of Comprehensive Income and Statement of Financial Position have been adjusted to reflect an increase in infrastructure costs and non-current other payables liability of $291k.
Significant Accounting Policies Basis of consolidation The Group financial statements are prepared by adding together the like items of assets, liabilities, equity, income, expenses and cash flows on a line by line basis for all entities in the Group. All significant intra-group balances, transactions, income, and expenses are eliminated in full on consolidation.
Subsidiaries WelTec consolidates in the Group financial statements all entities where WelTec has the capacity to control the financing and operating policies of an entity so as to obtain benefits from the activities of the entity. Investments in subsidiaries are carried at cost in the WelTec parent entity financial statements and tested for impairment on an annual basis.
Government grants Government grants are recognised when eligibility to receive the grant has been established. For Student Component Funding, entitlement is established upon the withdrawal period for an individual’s course of study having passed. For project-based grants, entitlement is established upon the completion of agreed milestones.
Student tuition fees Revenue from student tuition fees is recognised in the statement of comprehensive income on entitlement. Where funds have been received but not earned at balance date, an Income in Advance liability is recognised.
Rendering of services Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract at balance date.
Interest revenue Interest revenue is recognised on a time-proportionate basis that takes into account the effective yield on the financial asset.
Leases An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments net of lease inducements under an operating lease are recognised as an expense on a straight-line basis over the lease term.