Notes To The Financial Statements (Continued) For The Year Ended 30 Jun 2014 2.5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) g) Foreign currency translation Transactions in the other foreign currencies are initially recorded in the functional currency at the rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies were translated to the functional currency at rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the date when the fair value was determined. h) Provisions Provisions are recognised when the organisation has a present obligation, (legal or constructive) as a result of a past event and, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. i) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise of cash at bank and on hand. For the purpose of the consolidated and organisation statement of cash flows, cash and cash equivalents consist of cash at bank and on hand, net of outstanding bank overdrafts. j) Inventories Inventories are valued at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Inventories are subsequently measured at a weighted average cost. k) Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are recognised as assets of the organisation at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Rentals payable under operating leases are charged to income on a straight-line basis over the term of the lease. l) Current versus non-current classification The organisation presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is current when it is: Expected to be realized or intended to sold or consumed in normal operating cycle • Held primarily for the purpose of trading • Expected to be realized within twelve months after the reporting period, or • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when: • • • • It is expected to be settled in normal operating cycle It is held primarily for the purpose of trading It is due to be settled within twelve months after the reporting period, or There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period it is expected to be settled in normal operating cycle • It is held primarily for the purpose of trading • It is due to be settled within twelve months after the reporting period, or • There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period The organization classifies all other liabilities as non-current. 47