Page 35 - UKZN Foundation AR 2023

UNiVERSiTY OF KWAZULU-NATAL FOUNDATiON TRUST Trust Deed number: iT 589/2003
NOTES TO THE FiNANCiAL STATEMENTS (continued)
for the year ended 31December 2023
1.4. Financial instruments: IFRS 9 (continued)
Equity instruments
The Trust has elected to present fair value gains and losses on equity investments in profit and loss.
Dividends and interest from such investments continue to be recognised in profit or loss as other income when the Trust’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
impairment
The Trust assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, the Trust applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
De-recognition 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 de-recognition 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 de-recognition 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 reserves 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
Financial instruments include investments, cash, receivables and accounts payable. Where material, the particular recognition methods adopted are disclosed in the individual policy statements associated with the respective financial instruments.
Exposure to foreign currency (i.e.. exchange rate) and credit risks arises in the normal course of the Foundation’s fundraising and investment activities. Exchange rate risks associated with major foreign grants and donations received are managed by the adoption of various strategies designed to minimise these risks as far as practicable. Market and credit risk on investments is prudently managed on
behalf of the Foundation’s Trustees by externally appointed asset managers (“counterparties”) that have credit ratings equal to or better than those of the Foundation.
1.5. Property, plant and equipment
Items of property, plant and equipment are recorded at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assets 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.
Assets costing less than R5 000 are written off in the year of acquisition.
Depreciation is calculated on the straight-line method, at rates calculated to write off the costs or revalued amounts of assets to their residual values over their estimated useful lives, as follows:
Computer equipment: 3 years Furniture and other equipment: 5 years
UKZN FOUNDATiON ANNUAL REPORT 2023 33