AFRICAN DAWN ANNUAL REPORT 2018 50 Accounting Policies continued 2018 & 2017 The interest rates that has been applied in the discounting is an effective interest rate of 11,19% (2017: 11.44%). 1.19 Discontinued operations A discontinued operation is a component of the group that has been disposed of and represents a separate major line of business. Profit or loss from discontinued operations, including prior year components of profit or loss,is presented in a single amount in the statement of profit or loss. This amount comprises the post-tax profit or loss of discontinued operations. The disclosures for discontinued operations in the prior year relate to all operations that have been discontinued by the reporting date of the latest period presented. 2. New Standards and Interpretations 2.2 Standards and interpretations not yet effective At the date of authorization of these annual financial statements, the following standards and interpretations were in issue but not yet effective. ° IFRS 9 Financial Instruments • A final version of IFRS 9 has been issued which replaces IAS 39 Financial Instruments: Recognition and Measurement. The completed standard comprises guidance on Classification and Measurement, Impairment Hedge Accounting and Derecognition: - IFRS 9 introduces a new approach to the classification of financial assets, which is driven by the business model in which the asset is held and their cash flow characteristics. A new business model was introduced which does allow certain financial assets to be categorised as “fair value through other comprehensive income” in certain circumstances. The requirements for financial liabilities are mostly carried forward unchanged from IAS 39. However, some changes were made to the fair value option for financial liabilities to address the issue of own credit risk. - The new model introduces a single impairment model being applied to all financial instruments, as well as an “expected credit loss” model for the measurement of financial assets. - IFRS 9 contains a new model for hedge accounting that aligns the accounting treatment with the risk management activities of an entity, in addition enhanced disclosures will provide better information about risk management and the effect of hedge accounting on the financial statements. - IFRS 9 carries forward the derecognition requirements of financial assets and liabilities from IAS 39. - Prepayment Features with Negative Compensation. The narrow-scope amendment allows companies to measure particular prepayable financial assets with negative compensation at amortised cost or at fair value through other comprehensive income if a specified condition is met. The effective date of the standard is for years beginning on or after 01 January 2018. The company expects to adopt the standard for the first time in the 2019 financial statements. Had this standard been adopted in the beginning of the current financial year, the expected impact is an increase in the allowance for doubtful debts of R 441 000. Based on a preliminary assessment management have decided to apply the modified retrospective transition method. ° IFRS 15 Revenue from Contracts with Customers • New standard that requires entities to recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is achieved through a five step methodology that is required to be applied to all contracts with customers. • The new standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively and improve guidance for multiple-element arrangements. • The new standard supersedes: - IAS 11 Construction Contracts; - IAS 18 Revenue; - IFRIC 13 Customer Loyalty Programmes; - IFRIC 15 Agreements for the Construction of Real Estate; - IFRIC 18 Transfers of Assets from Customers; and - SIC-31 Revenue—Barter Transactions Involving Advertising Services.
AFRICAN DAWN 2018 Annual Report
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