Annual Report

Notes to the Financial Statements

Washington H. Soul Pattinson and Company Limited

Annual Report 2016

124

Other Notes

NOTE 35

OTHER ACCOUNTING POLICIES (continued)

d) Leases

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and benefits

incidental to the ownership of the asset are classified as finance leases. Finance leases are capitalised by recording

an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present

value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated

between the reduction of the lease liability and the lease interest expense for the period. Leased assets are

depreciated on a straight line basis over their estimated useful lives where it is likely that the Group will obtain

ownership of the asset or over the term of lease.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group, as

lessee, are classified as operating leases. Payment made under operating leases (net of any incentives received

from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

e) Trade and other payables

Trade and other payables are stated at their amortised cost. These amounts represent liabilities for goods and

services provided to the Group prior to the end of the financial year and which are unpaid. The amounts are

unsecured and usually paid within 30 to 45 days of recognition.

f ) Borrowing costs

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that

is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

g) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary

shares; and

by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus

elements in ordinary shares issued during the year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into

account:

the after income tax effect of interest and other financing costs associated with dilutive potential ordinary

shares; and

the weighted average number of additional ordinary shares that would have been outstanding assuming the

conversion of all dilutive potential ordinary shares.

h) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST

incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised

as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables in the statement of financial position are shown inclusive of GST receivable or payable.

The net amount of GST recoverable from, or payable to the ATO is included with other receivables or payables in

the statement of financial position.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of

investing and financing activities, which are disclosed as operating cash flows.