Annual Report 2018/19

NOTES TO FINANCIAL STATEMENTS 30 June 2019

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

Consumable Stocks – Consumable stocks are stated at the lower of cost and net realisable value. Cost comprises cost of purchase and other costs incurred in bringing the consumable stocks to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs to be incurred in marketing selling and distribution. Allowance is made for obsolete and slow- moving items.

Leases – Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Club as lessor Rental income from operating leases is recognised in profit or loss on a straight-line basis over the lease term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income. Property, Plant and Equipment – Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Construction-in-progress consists of upgrading work on buildings. Construction-in-progress is not depreciated. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Depreciation is charged so as to write off the cost of assets except for construction-in-progress, over their estimated useful lives, using the straight-line method, on the following basis: Buildings, improvements and additions – 10 to 20 years Plant, machinery and equipment – 5 years Furniture, fittings and fixtures – 5 years Outdoor furniture, fittings and fixtures – 3 years Motor vehicles – 5 years China, glass and silverware – 3 years Freehold land has an unlimited useful life and therefore is not depreciated. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.

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The American Club 2018/19 ANNUAL REPORT