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(f) Provisions (continued)
Accounting policy
Employee benefits
(i) Short term obligations
Liabilities for wages and salaries, including non-monetary benefits expected to be settled within
twelve months of the reporting date are recognised in respect of employees’ services up to the
reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Long term obligations
The liability for long service leave and associated on-costs is accumulated from the date of
commencement. They are measured at the amounts expected to be paid when the liabilities are
settled and discounted to determine their present value. Consideration is given to expected future
wage and salary levels with an allowance for expected future increases.
As not all annual leave is expected to be taken within twelve months of the respective service being
provided, annual leave obligations are classified as long term employee benefits in their entirety.
Annual leave is measured on a discounted basis utilising corporate bond market rate as per the G100
when discounting employee benefit liabilities.
Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the
Group has a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation and the amount can be reliably
estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the obligation at the reporting date.
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NOTE 7
NON-FINANCIAL ASSETS AND LIABILITIES (CONTINUED)