Annual Report 2018/19

NOTES TO FINANCIAL STATEMENTS 30 June 2019

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

FRS 116 Leases The Standard provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessors. The identification of leases, distinguishing between leases and service contracts, are determined on the basis of whether there is an identified asset controlled by the customer. Significant changes to lessee accounting are introduced, with the distinction between operating and finance leases removed and assets and liabilities recognised in respect of all leases (subject to limited exceptions for short-term leases and leases of low value assets). The Standard maintains substantially the lessor accounting approach under the predecessor FRS 17. The standard will affect primarily the accounting for the Club’s operating leases as a lessee. As at reporting date, the Club has no non-cancellable operating lease arrangements. Upon adoption of FRS 116, all non-cancellable lease obligations other than those which fall within the above exemptions, will be recognised as liabilities concurrently with the recognition of right of use of assets. Management has not early adopted the new FRS 116. Other than as disclosed above, management anticipates that the adoption of the other FRSs, INT FRSs and amendments to FRS in future periods will not have a material impact on the financial statements in the period of their initial adoption. Financial assets (before 1 July 2018) All financial assets are recognised and derecognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value plus transaction costs, except for those financial assets classified at fair value through profit or loss which are initially measured at fair value. Financial assets are classified into the following specified categories: “available-for-sale” financial assets and “loans and receivables”. The classification depends on the nature and purpose of financial assets and is determined at the time of initial recognition. Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in “investment income” line in the statement of comprehensive income. Fair value is determined in the manner described in Note 4. Financial instruments – Financial assets and financial liabilities are recognised on the Club’s statement of financial position when the Club becomes a party to the contractual provisions of the instrument.

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The American Club 2018/19 ANNUAL REPORT