Home' Nufarm Annual Report : Nufarm Annual Report Contents NOTES TO THE FINANCIAL STATEMENTS continued
2. Basis of preparation (continued)
(d) Use of estimates and judgements (continued)
(iii) Income taxes
The group is subject to income taxes in Australia and overseas jurisdictions. There are many transactions and calculations
undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Where the final tax
outcome of these matters is different from the amounts initially recorded, such differences will impact the current and deferred
tax provisions in the period in which the tax determination is made. Deferred tax assets are recognised only to the extent that
it is probable that future taxable profits will be available against which the assets can be utilised. The assessment of probability
involves estimation of a number of factors including future taxable income.
(iv) Defined benefit plans
A liability in respect of defined benefit pension plans is recognised in the balance sheet, and is measured as the present value
of the defined benefit obligation at the reporting date less the fair value of the pension plan’s assets. The present value of the
defined benefit obligation is based on expected future payments which arise from membership of the fund at the reporting
date, calculated annually by independent actuaries. Consideration is given to expected future salary levels, experience of
employee departures and periods of service. Refer note 26 for details of the key assumptions used in determining the
accounting for these plans.
(v) Valuation of inventories
Inventories of finished goods, raw materials and work in progress are valued at lower of cost and net realisable value. The net
realisable value of inventories is the estimated market price less costs to sell at the time the product is expected to be sold.
(vi) Capitalised development costs
Development expenditures are recognised as an intangible asset when the group judges and is able to demonstrate:
(a) the technical feasibility of completing the intangible asset so that it will be available for use;
(b) intention to complete;
(c) ability to use the asset; and
(d) how the asset will generate future economic benefits and the ability to measure reliably the expenditure during development.
Comparatives have been adjusted to present them on the same basis as current period figures.
3. Significant accounting policies
Except as described immediately below, the group’s accounting policies have been applied consistently to all periods
presented in these consolidated financial statements, and have been applied consistently by group entities.
The company has changed some of its accounting policies as the result of new or revised accounting standards that became
effective for the annual reporting period commencing on 1 July 2013. The affected policies and standards are:
• principles of consolidation: new standards AASB 10 Consolidated Financial Statements and AASB 11 Joint Arrangements; and
• accounting for employee benefits: revised AASB 119 Employee Benefits.
Other new standards that have been applied for the first time for the July 2014 annual report are AASB 12 Disclosure of
Interests in Other Entities, AASB 13 Fair Value Measurement, AASB 2012-2 Amendments to Australian Accounting Standards
Disclosures – Offsetting Financial Assets and Financial Liabilities, AASB 2012-5 Amendments to Australian Accounting
Standards arising from Annual Improvements 2009-2011 Cycle and Recoverable Amount for Non-financial Assets –
Amendments to IAS 36(2013). These standards have introduced new disclosures for the annual report but did not
materially affect the entity’s accounting policies or any of the amounts recognised in the financial statements.
(i) Principles of consolidation – subsidiaries and joint arrangements
AASB 10 was issued in August 2011 and replaces the guidance on control and consolidation in AASB 127 Consolidated and
Separate Financial Statements and in Interpretation 112 Consolidation – Special Purpose Entities. Under the new principles,
the group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity.
NUFARM LIMITED ANNUAL REPORT 2014 | 57
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