b'NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 (d) Financial Instruments Credit losses are measured as the present value of the difference between FinancialinstrumentsarerecognisedinitiallyonthedatethattheClubthe cash flows due to the Club in accordance with the contract and the cash becomes party to the contractual provisions of the instrument. flows expected to be received. This is applied using a probability weighted On initial recognition, all financial instruments are measured at fair valueapproach. On derecognition of a financial asset measured at amortised plus transaction costs (except for instruments measured at fair value throughcost, the difference between the assets carrying amount and the sum of the profit or loss where transaction costs are expensed as incurred). consideration received and receivable is recognised in profit or loss.Financial assets Trade receivables (and contract assets)All recognised financial assets are subsequently measured in their entiretyImpairment of trade receivables and contract assets have been determined at either amortised cost or fair value, depending on the classification of theusingthesimplifiedapproachinAASB9whichusesanestimationof financial assets. lifetime expected credit losses. The Club has determined the probability of Classification non-payment of the receivable and contract asset and multiplied this by the amount of the expected loss arising from default.On initial recognition, the Club classifies its financial assets into the followingThe amount of the impairment is recorded in a separate allowance account categories, those measured at: with the loss being recognised in the statement of profit or loss. Once the amortised cost receivable is determined to be uncollectable then the gross carrying amount fair value through profit or loss - FVTPL is written off against the associated allowance.fair value through other comprehensive income - equity instrument (FVOCIOther financial assets measured at amortised cost- equity) Impairmentofotherfinancialassetsmeasuredatamortisedcostare fair value through other comprehensive income - debt investments (FVOCIdeterminedusingtheexpectedcreditlossmodelinAASB9.Oninitial - debt) recognition of the asset, an estimate of the expected credit losses for the Financial assets are not reclassified subsequent to their initial recognitionnext 12 months is recognised. Where the asset has experienced significant unless the Club changes its business model for managing financial assets. increase in credit risk then the lifetime losses are estimated and recognised.Amortised cost Financial liabilitiesAssets measured at amortised cost are financial assets where: The Club measures all financial liabilities initially at fair value less transaction the business model is to hold assets to collect contractual cash flows; and costs, subsequently financial liabilities are measured at amortised cost using the contractual terms give rise on specified dates to cash flows are solelythe effective interest rate method.payments of principal and interest on the principal amount outstanding. The financial liabilities of the Club comprise trade and other payables.The Clubs financial assets measured at amortised cost comprise trade and(e) Impairment of Assetsother receivables and cash and cash equivalents in the statement of financialAt the end of each reporting period, the Club assesses whether there is any position. indication that an asset has been impaired.If such an indication exists, an Subsequent to initial recognition, these assets are carried at amortised costimpairment test is carried out on the asset by comparing the recoverable using the effective interest rate method less provision for impairment. amount of the asset, being the higher of the assets fair value less costs to Interest income and impairment are recognised in profit or loss. Gain or losssell and value in use to the assets carrying value. Any excess of the assets on derecognition is recognised in profit or loss. carrying value over its recoverable amount is expensed to the profit and loss Fair value through other comprehensive income account.TheClubsinvestmentsinequityinstrumentsnotheldfortradinghaveWhere it is not possible to estimate the recoverable amount of an individual been designated as fair value through other comprehensive income. Theasset, the Club estimates the recoverable amount of the cash-generating unit movement in fair value on equity instruments is accumulated in the financialto which the asset belongs.assets reserve. (f) Employee BenefitsDividend revenue received on underlying equity instruments investment isProvision is made for the Clubs liability for employee benefits arising from recognised in profit or loss. services rendered by employees to balance date. Employee benefits that Financial assets through profit or loss are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits The Club did not have any financial assets at fair value through profit or losspayable later than one year have been measured at the present value of the during the financial year. estimated future cash outflows to be made for those benefits. In determining Impairment of financial assets the liability, consideration is given to employee wage increases and the Impairment of financial assets is recognised on an expected credit loss (ECL)probability that the employees may not satisfy vesting requirements.Those basis for the following assets: cash flows are discounted using market yields on corporate bonds with terms to maturity that match the expected timing of cash flows.financial assets measured at amortised cost (g) ProvisionsUnder AASB 9 Financial Instruments, an expected credit loss model is appliedProvisionsarerecognisedwhentheClubhasalegalorconstructive in measuring impairment losses on financial assets. To reflect changes inobligation, as a result of past events, for which it is probable that an outflow credit risk this expected credit loss model requires the Club to account forof economic benefits will result and that outflow can be reliably measured.expected credit losses since initial recognition. If the credit risk on a financialProvisions are measured using the best estimate of the amounts required to instrument has not shown significant change since initial recognition, ansettle the obligation at reporting date.expected credit loss amount equal to the 12-month expected credit loss is(h) Cash and Cash Equivalentsused. However, a loss allowance is recognised at an amount equal to theCash and cash equivalents include cash on hand, deposits held at call with lifetime expected credit loss if the credit risk on that financial instrument hasbanks, other short-term highly liquid investments with original maturities of increased significantly since initial recognition. three months or less, and bank overdrafts. Bank overdrafts are shown within When determining whether the credit risk of a financial asset has increasedshort-termborrowingsincurrentliabilitiesonthestatementoffinancial significantsinceinitialrecognitionandwhenestimatingECL,TheClubposition.considersreasonableandsupportableinformationthatisrelevantand(i) Revenue Recognitionavailable. This includes both quantitative and qualitative information and analysisbasedontheClubshistoricalexperienceandinformedcreditThe Club has applied AASB 15: Revenue from Contracts with Customers. assessment and including forward looking information. This accounting standard only applies to revenue from customers. The Club The Club uses the presumption that an asset which is more than 90 dayshas adopted the standard using the modified retrospective method and, as past due has seen a significant increase in credit risk. such, there has been no impact to opening retained earnings at the date of The Club uses the presumption that a financial asset is in default when: adoption.the other party is unlikely to pay its credit obligations to the Club in full,Revenue from contracts with customers without recourse to the Club to actions such as realising security (if anyThe core principle of AASB 15 is that revenue is recognised on a basis is held); or that reflects the transfer of promised goods or services to customers at the financial asset is more than 90 days past due. an amount that reflects the consideration the Club expects to receive in 14NSW Masonic Club October 2020'