Notes to the financial statements |

For the year ended 31 December 2022

2. Summary of significant accounting policies (continued)

Distinction between revenue and capital contribution:

Most Crown funding received is operational in nature. Thus it is provided by the Crown under the authority of an expense appropriation and is recognised as revenue. Where funding is received from the Crown under the authority of a capital appropriation, Te Wānanga o Aotearoa accounts for the funding as a capital contribution directly in accumulated funds.

Estimation of useful lives of assets:

The estimation of the useful lives of assets has been based on historical experience as well as the manufacturers' warranties (for plant and equipment), lease terms (for leased equipment) and turnover policies (for motor vehicles). In addition, the condition of each asset is assessed at least once per year and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.

Property revaluations:

Note 13 provides information about the estimates and assumptions exercised in the measurement of revalued land and buildings.

3. Revenue Accounting policy

Revenue classification

Te Wānanga o Aotearoa classifies its revenue as exchange and non-exchange transactions. Exchange transactions are transactions in which one entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services, or use of assets) to another entity in exchange. Non-exchange transactions are those where Te Wānanga o Aotearoa either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange.

Revenue recognition

Revenue is recognised when the amount of revenue can be measured reliably and it is probable that economic benefits will flow to Te Wānanga o Aotearoa and is measured at the fair value of consideration received or receivable.

Revenue from exchange transactions

The following specific recognition criteria in relation to Te Wānanga o Aotearoa's revenue streams must also be met before revenue is recognised.

Rental revenue

Rental revenue is recognised in the surplus/(deficit) on an accrual basis.

Interest revenue

Interest revenue is recognised on a time proportion basis that takes into account the effective yield on the asset.

Dividend revenue

Dividends are recognised when the right to receive payment has been established.

Contract revenue

Certain contract revenue is accounted for as an exchange transaction and is recognised on percentage of completion basis.

Revenue from non-exchange transactions

Inflows of resources from non-exchange transactions are only recognised as assets where it is probable that the associated future economic benefit or service potential will flow to the entity and fair value is reliably measured.

Liabilities are recognised in relation to inflows of resources from non-exchange transactions when there is a resulting present obligation as a result of the non-exchange transactions where it is probable that an outflow of resources embodying future economic benefit or service potential will be required to settle the obligation and the amount of the obligation can be reliably estimated.

The following specific recognition criteria in relation to Te Wānanga o Aotearoa's non-exchange transaction revenue streams must also be met before revenue is recognised.

Student Achievement Component Funding (SAC)

SAC funding is Te Wānanga o Aotearoa's main source of operational funding from the Tertiary Education Commission (TEC). Te Wānanga o Aotearoa considers SAC funding to be non-exchange and recognises SAC funding as revenue when the course withdrawal date has passed, based on the number of eligible students enrolled in the course at the date and the value of the course.