The American Club 2019/2020 Annual Report

47 PAGE

NOTES TO FINANCIAL STATEMENTS 30 June 2020

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) Provisions – Provisions are recognised when the Club has a present obligation (legal or constructive) as a result of a past event, it is probable that the Club will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Government grants - Government grants are not recognised until there is reasonable assurance that the Club will comply with the conditions attaching to them and the grants will be received. The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates. Government grants whose primary condition is that the Club should purchase, construct or otherwise acquire non-current assets are recognised as deferred income in the statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets. Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the group with no future related costs are recognised in profit or loss in the period in which they become receivable. Revenue Recognition – The Club recognises revenue when control of a goods or service is transfer to a customer. Revenue from food and beverage is recognised upon sale of the food and beverage items at the point in time. Revenue from member activities are recognised when the services have been rendered over time. Revenue from club services are recognised when the services have been rendered over time. Revenue from membership dues is recognised on accrual basis over time. Entrance fees are recognised when a member is elected into full membership at the point in time when funds received are retained in an account as fees received in advance from potential members. Interest income is accrued on a time basis over time, by reference to the principal outstanding and at the effective interest rate applicable.