Annual Report

Notes to the Financial Statements

Washington H. Soul Pattinson and Company Limited

Annual Report 2016

122

Other Notes

NOTE 35

OTHER ACCOUNTING POLICIES

a) New accounting standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 July

2016 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of

these new standards and interpretations is set out below:

AASB 15 Revenue from Contracts with Customers

This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from

contracts with customers. It supersedes current revenue recognition guidance including

AASB 118 Revenues, AASB

111 Construction Contracts

and related interpretations. The core principle is that an entity recognises 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 standard also allows costs

associated with obtaining a contract to be capitalized and amortised over the life of the new contract. The Group

has not yet assessed how its own revenue recognition would be affected by the new rule. The Group does not

intend on adopting the new standard before its operative date, which means that it would be first applied in the

annual reporting period ending 31 July 2019.

ii. AASB 9 Financial Instruments

This standard will be applicable retrospectively and includes revised classification, measurement and derecogni-

tion of financial assets and financial liabilities and simplified requirements for hedge accounting. The Group does

not intend on adopting the new standard before its operative date, which means that it would be first applied in

the annual reporting period ending 31 July 2019.

The Group has considered the adoption of

AASB 9

and the major impact to the Consolidated entity will be to the

Group’s long term equity investments. Currently, changes in market value of these investments are recognised

in the revaluation reserve. When an investment is disposed of, the gain or loss measured from the original cost is

then recognised in the income statement.

Under the new standard, no gain or loss on the disposal of an investment would be recognised in the income

statement and investments would no longer be subject to impairment reviews as all movements in market value

are only recognised in the revaluation reserve.

There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect

the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does

not have any such liabilities. The new hedging rules align hedge accounting more closely with the Group’s risk

management practices. As a general rule, it will be easier to apply hedging going forward. The new standard also

introduces expanded disclosure requirements and changes in presentation. The Group has not yet assessed how

its own hedging arrangements would be affected by the new rules.

iii. AASB 16 Leases

This standard replaces

AASB 117

Leases and some lease related Interpretations and requires that all leases to

be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset leases. The standard

provides new guidance on the application of the definition of leases and on sale and lease back accounting. It

largely retains the existing lessor accounting requirements in

AASB 117

. It requires new and different disclosures

about leases. The Group is currently undertake a detailed assessment of the impact of

AASB 16

There are no other standards that are not yet effective and that are expected to have a material impact on the

Group in the current or future reporting periods and on foreseeable future transactions.