Axiom 2014 Annual Report - page 97

Notes to the Financial Statements
for the year ended 30 September 2014
95
2014 Annual Report
4. Summary of significant accounting
policies (continued)
Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain
timing or amount when the Company has a legal or
constructive obligation arising as a result of a past
event when it is probable that an outflow of economic
benefits will be required to settle the obligation and
when a reliable estimate can be made. Where the time
value of money is material, provisions are stated at
the present value of the expenditure expected to settle
the obligation.
Where it is not probable that an outflow of economic
benefits will be required, or the amount cannot be
estimated reliably, the obligation is disclosed as a
contingent liability, unless the probability of outflow of
economic benefits is remote. Possible obligations, whose
existence will only be confirmed by the occurrence or
non-occurrence of one or more future events are also
disclosed as contingent liabilities unless the probability
of an outflow of economic benefits is remote.
Revenue recognition
Provided that it is probable that the economic benefits
will flow to the Company and the revenue and costs,
if applicable, can be measured reliably, revenue is
recognised in profit or loss as follows:
––
interest income is recognised as it accrues using the
effective interest method.
––
sundry income is recognised at the fair value of the
consideration received or receivable.
Translation of foreign currencies
These financial statements are presented in the
Australian dollar, which is the Company’s functional and
presentation currency. Foreign currency transactions
during the year are translated at the foreign exchange
rates ruling at the transaction dates. Monetary assets
and liabilities denominated in foreign currencies are
translated at the foreign exchange rates ruling at the
balance sheet date. Exchange gains and losses are
recognised in profit or loss.
Non-monetary assets and liabilities that are measured
in terms of historical cost in a foreign currency are
translated using the foreign exchange rates ruling at the
transaction dates. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair
value are translated using the foreign exchange rates
ruling at the dates the fair value was determined.
The results of foreign operations are translated into
Australian dollars at the exchange rates approximating
the foreign exchange rates ruling at the dates of the
transactions. Balance sheet items are translated
into Australian dollars at the foreign exchange
rates ruling at the balance sheet date. The resulting
exchange differences are recognised directly in other
comprehensive income and accumulated separately
in equity in the exchange reserve.
On disposal of a foreign operation, the cumulative
amount of the exchange differences relating to that
foreign operation is reclassified from equity to profit or
loss when the profit or loss on disposal is recognised.
Convertible notes
Convertible notes that do not contain an equity
component are accounted for as follows:
At initial recognition the derivative component of the
convertible notes is measured at fair value and presented
as part of derivative financial instruments. Any excess
of proceeds over the amount initially recognised as
the derivative component is recognised as the liability
component. Transaction costs that relate to the issue
of the convertible note are allocated to the liability and
derivative components in proportion to the allocation of
proceeds. The portion of the transaction costs relating
to the liability component is recognised initially as part
of the liability. The portion relating to the derivative
component is recognised immediately in profit or loss.
At the end of each reporting period the derivative
component is re-measured. The liability component is
subsequently carried at amortised cost. The interest
expense recognised in profit or loss on the liability
component is calculated using the effective interest
method.
If the note is converted, the carrying amounts of the
derivative and liability components are transferred to
share capital and share premium as consideration for
the shares issued. If the note is redeemed, any difference
between the amount paid and the carrying amounts of
both components is recognised in profit or loss.
Borrowing costs
Borrowing costs are expensed in profit or loss in the year
in which they are incurred.
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