A N N U A L R E P O R T 2 0 1 6
82
NOTES TO THE
FINANCIAL STATEMENTS
For the Financial Year Ended 31 March 2016
2.
Summary of significant accounting policies (cont¡¯d)
2.14
Inventories (cont¡¯d)
Where necessary, allowance is provided for damaged, expired and slow-moving items to adjust the carrying value of inventories to the lower
of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated
costs necessary to make the sale.
2.15
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be
estimated reliably.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that
an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money
is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.16
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attaching conditions will be
complied with.
Where the grant relates to income, the grant shall be recognised in profit or loss on a systematic basis over the periods in which the entity
recognises as expenses the related costs for which the grants are intended to compensate. Grants related to income may be presented as a
credit in profit or loss, either separately or under a general heading such as ¡°Other income¡±. Alternatively, they are deducted in reporting the
related expenses.
2.17
Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or
production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale
are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially
completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing of funds.
