Page 50 - Sun Resources 2014 Annual Report

1 Summary of Significant Accounting Policies (continued)
All inter-company balances and transactions between subsidiaries in the Group, including any unrealised profits
or losses have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where
necessary to ensure consistencies with those policies applied by the parent entity.
Where controlled subsidiaries have entered or left the consolidated entity during the year, their operating results have
been included from the date control was obtained or until the date control ceased.
b Revenue Recognition
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
Revenue from USA producing operations is recognised when received from the Operator and is two months in
arrears due to lag between sales and when received.
Dividend revenue is recognised when the right to receive a dividend has been established.
Revenue from rendering a service is recognised upon delivery of the service.
All revenue is stated net of the amount of goods and services tax (GST).
c Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where that amount of GST
incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as
part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the
statement of financial position are shown inclusive of GST.
Cash flows are presented in the statement of cash flow on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
d Income Tax
The charge for current income tax expense is based on the profit or loss for the year adjusted for any non-
assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially
enacted by the year end date.
Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no
effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the
liability is settled. Deferred tax is credited to the statement of comprehensive income except where it relates to items
that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary differences can be utilised. The amount of benefits brought to account or which
may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation
and the anticipation that the economic subsidiary will derive sufficient future assessable income to enable the benefit
to be realised and comply with the conditions of deductibility imposed by the law.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Sun Resources and its wholly owned Australian subsidiaries have formed an income tax consolidated group under
the tax consolidation regime. Sun Resources is responsible for recognising the current and deferred tax assets and
liabilities for the tax consolidation group. The tax consolidated group has not entered into a tax funding agreement
whereby each company in the group contributes to the income tax payable in proportion to their contribution to
the net profit before tax of the tax consolidated group. The parent will therefore have liability for all tax as the other
companies in the group will not be liable. All contributions and distributions have been accounted for.
e Foreign Currency Transactions and Balances
Functional and Presentation Currency
The functional currency of each of the Group’s subsidiaries is measured using the currency of the primary economic
environment in which that subsidiary operates. The consolidated financial statements are presented in Australian
dollars which is the parent entity’s functional and presentation currency.
Transactions and Balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of
the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary
items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the Statement of Profit or Loss
and other Comprehensive Income.
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS
48 SUN RESOURCES ANNUAL REPORT 2014