HORSHAM RURAL CITY COUNCIL
NOTES TO THE FINANCIAL STATEMENT (Cont.) FOR THE YEAR ENDED 30th JUNE, 2014
36 FINANCIAL INSTRUMENTS FINANCIAL RISK MANAGEMENT
(a) Accounting Policy, Terms and Conditions
Recognised Financial
Instruments
Financial Assets Cash and
cash equivalents Financial Assets
Cash on hand and at bank and
17 money market call account are valued at face value. Interest
19 is recognised as it accrues. Other Debtors
Investments and Bills are valued at cost. Investments are held to maximise interest returns of surplus cash. Interest revenues are recognised as they accrue. Receivables are carried at
18 nominal amounts due less
any provision for doubtful debts. A provision for doubtful debts is recognised when there is objective evidence that an impairment loss has occurred. Collectability of overdue amounts is assessed on an ongoing basis.
Financial Liabilities Payables
23 Liabilities are recognised for amounts to be paid in the future for goods received and services
provided to Council as at balance date whether or not invoices have been received.
Interest bearing loans
and borrowings 26 Loans are carried at their
principal amounts, which represent the general rates of Council. The interest rate the present value of future cash flows associated with servicing the debt. Interest is accrued over the period it becomes due and recognised as part of payables. Finance leases are accounted for at their principle amount with lease payments discounted to
present value using the interest rates implicit in the leases.
Bank Overdraft
Overdrafts are recorded at their principal amount.
Interest is
charged as an expense as it accrues.
The overdraft is subject to annual review. secured by a mortgage over Council's general rates and is repayable on demand.
It is
Interest rates on utilised overdraft was 7.01 - 8.08 % during 2013/2014 (8.71 - 9.81% during 2012/13). The interest rate as at balance date was 7.01%.
Bank loans are secured by way of mortgages over for individual bank loans is fixed for the period
of the loan. Bank loans are repayable in equal instalments comprising principal and interest. Interest is payable in arrears. The weighted average on borrowings is 6.55% during 2013/14 (6.56% in 2012/13).
As at balance date, the Council had finance leases with an average lease term of 2 years
General Creditors are unsecured, not subject to interest charges and are normally settled within 30 days of invoice receipt.
On call deposits returned floating interest rate returns of 2.25% - 2.50% in 2013/14 (2.5% - 3.25% in 2012/13). The interest rate at balance date was 2.25%. (2.5% in 2012/13).
Term deposits and bank bills returned fixed interest rate returns between 2.84% and 4.1%. The rates at balance date were between 2.9% and 3.65%.
General Debtors are unsecured and interest free. Credit terms are usually 30 days.
Note Accounting Policy Terms and Conditions
Annual Report 2013-2014 q Page 51
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