Page 13 University of Technology, Jamaica Notes to the Financial Statements 31 March 2020 (expressed in Jamaican dollars unless otherwise indicated) 2. Summary of Significant Accounting Policies (Continued) (f) Financial instruments (continued) Financial liabilities The University’s financial liabilities are initially measured at fair value and are subsequently measured at amortised cost using the effective interest method. At the date of the statement of financial position, the following items were classified as financial liabilities: bank overdraft, accounts payable and designated receipts. (g) Securities purchased under agreements to resell Securities purchased under resale agreements are treated as collateralized financing transactions. The difference between the sale/purchase and repurchase/resale price is treated as interest and accrued over the life of the agreements using the effective yield method. (h) Inventories Inventories are valued at the lower of cost and net realisable value, cost being determined on a first-in, first-out basis. Net realisable value is the estimated selling price in the ordinary course of business less selling expenses. (i) Accounts receivable Receivables are recognised when due, and are carried at amortised cost, less provision for impairment, which is deemed to approximate the fair value of these short-term assets. These include amounts due from students sponsors and staff. ECLs are calculated on receivables on a periodic basis and the carrying amount reduced accordingly with the impairment loss recognised in net surplus. Refer to Note 2 (f) for further details. (j) Cash and cash equivalents Cash and cash equivalents include cash at bank and in hand, deposits held at call with banks, other shortterm highly liquid investments with original maturities of three months or less, net of bank overdrafts. These are carried at amortised cost. (k) Accounts payable Accounts payable are initially recognized at fair value and are subsequently carried at amortised cost. (l) Designated receipts Amounts received from lenders or donors, which are designated for specified or identifiable students, or others, for the purpose of covering costs incurred at, or in relation to their attendance at the University, are included as a current liability until paid to, or applied on behalf of the beneficiaries. (m) Provisions Provisions are recognised when the University has a present legal or constructive obligation as a result of past events, if it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the University expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. University of Technology, Jamaica 129
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