Korehāhā Rangahau

2.2 Revenue Exchange & Non-Exchange Revenue

For exchange contracts, revenue is recognised to the extent that it is probable that the economic benefit will flow to The Rūnanga. Revenue is measured at the fair value of the consideration. The extent to which economic benefit is assessed is based on reaching milestones in the contract or matching revenue with total expenditure expected to be incurred. For non-exchange revenue, the revenue is recognised in surplus or deficit when the Rūnanga becomes entitled to receive (or has received) the funds. The receipts are recognised as revenue in surplus or deficit, except where conditions which require the grant to be used as specified or returned remain unfulfilled at balance date, in which case the related amount is recognised as a liability. In addition, a liability is recognised in respect of other return clauses (if any) where it is probable that payment will be required. Judgement is often required in determining the timing of revenue recognition for contracts that span a balance date and multi-year contracts.

Grant Income

Grant income (from the Government or other parties) are assessed against the criteria for non-exchange or exchange transactions and treated accordingly.

Dividend Income

Dividend income is recognised in surplus or deficit on the date the Group's right to receive payment is established.

Farming Operations Income

Farming operations income includes dairy income and livestock sales. Income is recognised in surplus or deficit when the revenue associated with the transactions can be measured reliably. Revenues from the sale of goods are recognised when the significant risks and rewards of ownership have been transferred, the Group retains neither involvement nor control over the goods sold, it is probable that economic benefits will flow to the Group and the costs incurred in respect of the transaction can be measured reliably.

Rental Income

Rental income is recognised in surplus or deficit on a straight line basis over the term of the lease.

Other Income

Other income is recognised in surplus or deficit when the revenue associated with the transactions can be measured reliably for the rendering of goods and services. Revenue from the sale of goods are recognised when the significant risks and rewards of ownership have been transferred, the Group retains neither involvement nor control over the goods sold, it is probable that economic benefits will flow to the Group and the costs incurred in respect of the transaction can be measured reliably. Revenue for services provided under exchange transactions are recognised on a percentage of completion basis, as the services are provided.

Net Financing (Expense)/Income

Net financing income represents financing income less financing expenses. Financing income comprises interest income received on funds invested that are recognised in surplus or deficit. Financing expenses comprise interest paid on borrowings. Interest income is recognised in surplus or deficit as the income accrues on an effective interest basis. Any fees and directly related transaction costs that are an integral part of earning interest income are recognised over the expected life of the investment, that is, these costs are recognised evenly in proportion to the investment amount outstanding over the period to maturity.

2.3 Expenses Operating Leases

Operating lease payments where the lessor effectively retains substantially all the risks and rewards of ownership of the leased items are included in equal instalments over the term of the lease and expensed to surplus or deficit. Lease incentives received are recognised over the term of the lease as an integral part of the total lease payments.

Grants and sponsorships

Grants and sponsorship costs are recognised as an expense in surplus or deficit (and as a liability) when the Rūnanga has a constructive or actual obligation to make the payment. This is usually when the Rūnanga has entered into an agreement with, or otherwise notified the recipient of the agreed amount. The Rūnanga considers at each balance date whether it is probable that the recipient will be required to repay the grant or sponsorship under the terms and conditions of the agreement, in which case a receivable would be recognised and the grant expense reversed where this is recoverable.

2.4 Taxation Māori Authority Tax Credits

The Group has Māori Authority status. Entities in the Group are tax exempt except for Ngāti Awa Asset Holdings Limited which has a tax liability of 17.5%. Taxes paid by Ngāti Awa Asset Holdings Limited generate Māori Authority Credits, which are tax credits available to pass onto its shareholder. Te Rūnanga o Ngāti Awa recognises a tax receivable from the IRD for the Māori Authority Credits received from Ngāti Awa Asset Holdings Limited in the period in which the credits have been distributed.

Income Tax

Income tax is recognised in surplus or deficit as tax expense, except when it relates to items directly credited to equity, in which case it is recorded in equity, or where it arises from the initial accounting for a business combination, in which case it is included in the determination of goodwill. Current tax is the expected tax payable on taxable income for the period, based on tax rates (and tax laws) which are enacted or substantively enacted by the reporting date and including any adjustments for tax payable in previous periods. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). Current tax assets and liabilities are offset only to the extent that they relate to income taxes imposed by the same taxation authority and there is a legal right and intention to settle on a net basis and it is allowed under tax law. Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on: - The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit, and - Investments in subsidiaries and jointly controlled entities where the Rūnanga is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

2.5 Cash and cash equivalents

Cash and cash equivalents includes deposits held at call with banks and other short term highly liquid investments with an original maturity of less than 3 months.

2.6 Trade and Other Receivables

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost on an effective interest basis with any expected losses recognised from initial recognition of the receivables. Bad debts are written off during the year in which they are identified.

2.7 Biological assets and agricultural produce

(i) Livestock Livestock is carried at fair value where fair value is based on the market price of livestock of similar age and gender. Gains and losses on changes in fair value are recognised in surplus or deficit. Livestock consists of sheep and cattle.

(ii) Farm Woodlot The Farm Woodlot asset represents standing trees at fair value less estimated point of sale costs. The farm woodlot asset is a consumable biological asset. Any movement in valuation is recognised in surplus or deficit.

2.8 Investments

Investments are carried at fair value unless they are not quoted in an active market and their fair value cannot be reliably measured. The fair value of such investments is reliably measurable where the variability in the range for a reasonable fair value estimate is not significant or probabilities of the various estimates within the range of fair values can be reasonably assessed and used in estimating fair value.

2.9 Investment property

Investment properties are stated at fair value. Any movement on revaluation is recognised in surplus or deficit. Management test fair value annually with an independent assessment not more than five yearly intervals.

2.10 Forestry Land Assets

Forestry land assets represent the land assets owned with long term lease to forestry companies. Forestry land assets are stated at fair value. Any movement in fair value is recognised in surplus or deficit.

2.11 Intangible assets Carbon credits

Intangible assets include carbon credits acquired by way of a Government grant and are recognised at fair value. Increases in the carrying amount arising on revaluation are credited to other comprehensive revenue and expense except to the extent they reverse a previous decrease recognised in surplus or deficit. Decreases in the carrying amount arising on revaluation are recognised in other comprehensive revenue and expense to the extent they reverse a previous increase, any further decrease will be recognised in surplus or deficit.

Fish quota

Fish quota shares received by way of settlement are recognised at their fair value at the date of settlement and subsequently carried at cost less impairment. Fish quota is issued into perpetuity and therefore has an indefinite life. Given this, fish quota is not amortised, although it is tested annually for impairment.

Amortisation

Amortisation is recognised in the surplus or deficit on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

2.12 Property, plant and equipment

All owned items of property, plant and equipment are recorded at cost less accumulated depreciation and impairment losses with the exception of the Ngāti Awa Farm which is recorded at deemed cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits or service potential associated with the item will flow to the Group and the cost of the item can be measured reliably.

Cultural Assets

The cultural assets category includes carvings and flax tukutuku, these assets have been recorded at deemed cost. Te Mānuka Tutahi Marae is carried at an assigned value on receipt from the Crown plus capital improvements. As cultural assets tend to have an indefinite life and are generally not of a depreciable nature, depreciation is not applicable.