Page 85 - 2022 BWA ANNUAL REPORT

WESTERN AUSTRALIAN BASKETBALL FEDERATION INC.
Notes to the financial statements
for the year ended 31 December 2022
Note
5 Non-financial assets and financial liabilities (cont.)
5.4 Provisions
2022 $
2021 $
5.4.1 Current
Employee entitlements
5.4.3 Description of provisions
a. Provision for employee entitlements represents amounts accrued for annual leave (AL) and long service leave (LSL). The current portion for this provision includes the total amount accrued for AL entitlements and the amounts accrued for LSL entitlements that have vested due to employees having completed the required period of service. The Association does not expect the full amount of AL or LSL balances classified as current liabilities to be settled within the next 12 months. However, these amounts must be classified as current liabilities since the Association does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.
219,730
219,730
197,456
197,456
5.4.2 Non-current
Employee entitlements
17,663
64,128
17,663
64,128
5.4.4 Accounting policy
Provisions are recognised when the Association has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.
When the Association expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement.
Provisions are measured at the present value or management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense.
5.4.5 Key estimate – Provision for long service leave
The Association’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The Association discounts the long service leave provision using the appropriate externally obtained government bond rate.
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