Page 255 - SAMRC Annual Report 2023-24

FINANCIAL INFORMATION

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

(CONTINUED)

1.20 Revenue recognition for exchange and non-exchange
transactions (continued)

Rental income
Rental income from tenants is recognised in the statement of financial performance on a straight line basis
over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental
income, over the term of the lease.

Deferred income
Deferred income is recognised as revenue to the extent that expenses are incurred and that conditions of
the grant are met.

Social outcomes based contracts
Income received from the social investor is recognised in the statement of financial performance when all
the contractual commitments are met.

A liability will be recognised once the social outcomes have been verified by the verification agent.
1.21 Borrowing costs

Borrowing costs are interest and other expenses incurred by an entity in connection with the borrowing
of funds.
Borrowing costs are recognised as an expense in the period in which they are incurred.

1.22 Accounting by principals and agents

Identification
An agent is an entity that has been directed by another entity (a principal), through a binding arrangement,
to undertake transactions with third parties on behalf of the principal and for the benefit of the principal.
A principal is an entity that directs another entity (an agent), through a binding arrangement, to undertake
transactions with third parties on its behalf and for its own benefit.

A principal-agent arrangement results from a binding arrangement in which one entity (an agent),
undertakes transactions with third parties on behalf, and for the benefit of, another entity (the principal).

Identifying whether an entity is a principal or an agent
When the entity is party to a principal-agent arrangement, it assesses whether it is the principal or the
agent in accounting for revenue, expenses, assets and/or liabilities that result from transactions with third
parties undertaken in terms of the arrangement.

The assessment of whether an entity is a principal or an agent requires the entity to assess whether the
transactions it undertakes with third parties are for the benefit of another entity or for its own benefit.

Binding arrangement
The entity assesses whether it is an agent or a principal by assessing the rights and obligations of the
various parties established in the binding arrangement.

Where the terms of a binding arrangement are modified, the parties to the arrangement re-assess whether
they act as a principal or an agent.

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