Page 38 - UKZN Foundation AR 2024

UNIVERSITY OF KWAZULU-NATAL FOUNDATION TRUST Trust Deed number: IT 589/2003
ACCOUNTING POLICIES (continued)
for the year ended 31December 2024
Impairment
The Trust assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Derecognition of financial assets
The Foundation de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Foundation neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Foundation recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Foundation retains substantially all the risks and rewards of ownership of a transferred financial asset, the Foundation continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On de-recognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of an investment in a debt instrument classified as at FVOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in equity instrument which the University has elected on initial recognition to measure at FVOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVPL. Financial liabilities are classified as at FVPL when the financial liability is:
• held for trading, or
• it is designated as at FVPL.
Derecognition of financial liabilities
A financial liability will be removed from the statement of financial position when, and only when, it is extinguished, that is, when the obligation specified in the contract is either discharged or cancelled or expires. Where there has been an exchange between an existing borrower and lender of debt instruments with substantially different terms, or there has been a substantial modification of the terms of an existing financial liability, this transaction is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. A gain or loss from extinguishment of the original financial liability is recognised in profit or loss.
1.5. Plant and equipment
Items of plant and equipment are recorded at historical cost less accumulated depreciation and impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, when it is probable that future economic benefits will flow to the entity and the cost of the item can be measured reliably. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Assets costing less than R5000 are written off in the year of acquisition. Depreciation is calculated on the straight-line method, at rates calculated to write off the costs of assets, to their residual values over their estimated useful lives, as follows:
Computer equipment :3 years Furniture and other equipment: 5 years
Routine maintenance costs are charged to income as incurred. Costs of major maintenance or refurbishment of items of plant and equipment are recognised as expenses, except where the useful lives of the assets concerned have been extended. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.
Gains and losses on disposal of property, plant and equipment are determined by comparing the carrying value of the respective assets at disposal to the proceeds on their disposal and are accounted for in the Statement of profit or loss and other comprehensive income.
1.6. Post-retirement health care obligations
The Foundation provides post-retirement health care benefits for all employees and retirees who were members of the Foundation of KwaZulu-Natal Medical Scheme prior to 1 August 2004. In the case of serving members, the entitlement to these benefits is conditional on employees remaining in service up to retirement age. The expected costs of these benefits are accrued over the periods
36 UKZN FOUNDATION ANNUAL REPORT 2024