Page 78 - BWA 2021 ANNUAL REPORT

WESTERN AUSTRALIAN BASKETBALL FEDERATION INC.
Notes to the financial statements
for the year ended 31 December 2021
Note 5 Non-financial assets and financial liabilities (cont.)
5.3 Leases (cont.)
5.3.6 Accounting policy
a. Recognition and measurement
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance leases or operating leases. From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Association.
i. Right of Use Asset
The Association recognises a right of use asset at the commencement date of the lease. The right of use asset is initially measured at cost. The cost of right of use assets includes the amount of lease liabilities recognised, adjusted for any lease payments made at or before the commencement date, plus initial direct costs incurred and an estimate of costs to dismantle, remove or restore the leased asset, less any lease incentives received.
Right-of-use assets are measured at cost comprising the following:
◼ the amount of the initial measurement of lease liability
◼ any lease payments made at or before the commencement date less any lease incentives received ◼ any initial direct costs, and
◼ restoration costs.
Subsequent to initial measurement, the right of use asset is depreciated on a straight-line basis over the shorter of the lease term and the estimated useful life as follows:
◼ Properties 60 months
Right of use assets are subject to impairment and are adjusted for any remeasurement of lease liabilities.
ii. Lease liabilities
At the commencement date of the lease, the Association recognises lease liabilities at the present value of lease payment to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payments occurs. The present value of lease payments is discounted using the interest rate implicit in the lease or, if the rate cannot be readily determined, the Association's incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
The amount of lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Association's estimate of the amount expected to be payable under a residual value guarantee, or if the Association changes its assessment of whether it will exercise a purchase, extension, or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right of use asset, or is recognised in profit or loss if the carrying amount of the right of use asset has been reduced to zero.
The Association has elected not to recognise right of use assets and lease liabilities for short term leases that have a lease term of 12 months or less and do not contain a purchase option, and leases of low value assets. The Association recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
b. Extension and termination options
Extension options are included in the property leases of the Association.
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