Page 238 - SAMRC Annual Report 2023-24

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024
SIGNIFICANT ACCOUNTING POLICIES

(CONTINUED)

1.6 Intangible assets (continued)
Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual
values. The estimated useful lives for current and comparative periods are as follows:

ITEM DEPRECIATION METHOD AVERAGE USEFUL LIFE
Computer software Straight line 3 – 10 years

Intangible assets are derecognised:
• on disposal; or
• when no future economic benefits or service potential are expected from its use or disposal.
The gain or loss arising from the derecognition of intangible assets is included in surplus or deficit when the
asset is derecognised (unless the Standard of GRAP on leases requires otherwise on a sale and leaseback).
1.7 Investments in controlled entities

Investments in controlled entities are carried at cost less any accumulated impairment. The financial
statements of the entity is not consolidated with those of the controlled entities, as the entities have had
no trading activities and they are not material.
1.8 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or a residual interest of another entity.

A concessionary loan is a loan granted to or received by an entity on terms that are not market related.

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation.
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates.
Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s
statement of financial position.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial
liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments or receipts through the expected life of the financial instrument or, when appropriate,
a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, an entity shall estimate cash flows considering all contractual terms of the financial
instrument (for example, prepayment, call and similar options) but shall not consider future credit losses.
The calculation includes all fees and amounts paid or received between parties to the contract that are an
integral part of the effective interest rate, transaction costs, and all other premiums or discounts. There
is a presumption that the cash flows and the expected life of a group of similar financial instruments can
be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash
flows or the expected life of a financial instrument (or group of financial instruments), the entity shall use
the contractual cash flows over the full contractual term of the financial instrument (or group of financial
instruments).

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable
willing parties in an arm’s length transaction.

236 SAMRC ANNUAL REPOR T 2023-24