CSL Ltd Annual Report 2019

CSL Limited Annual Report 2019 93 If an entity in the Group has undertaken transactions in foreign currency, these transactions are translated into that entity’s functional currency using the exchange rates prevailing at the dates of the transactions. Where the functional currency of a subsidiary is not US dollars, the subsidiary’s assets and liabilities are translated on consolidation to US dollars using the exchange rates prevailing at the reporting date, and its profit and loss is translated at average exchange rates. All resulting exchange differences are recognised in other comprehensive income and in the foreign currency translation reserve in equity. d. Other accounting policies Significant accounting policies that summarise the measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements. e. Key judgements and estimates In the process of applying the Group’s accounting policies, management has made a number of judgements and estimates of future events. Material judgements and estimates are found in the following notes: Note 2: Revenue and Expenses Page 96 Note 3: Tax Page 97 Note 4: Inventories Page 99 Note 5: People Costs Page 100 Note 7: Intangible Assets Page 104 Note 15: Trade Receivables & Payables Page 117 Note 16: Provisions Page 118 f. The notes to the financial statements The notes to these financial statements have been organised into logical groupings to help users find and understand the information they need. Where possible, related information has been provided in the same place. More detailed information (for example, valuation methodologies and certain reconciliations) has been placed at the rear of the document and cross-referenced where necessary. CSL has also reviewed the notes for materiality and relevance and provided additional information where it is helpful to an understanding of the Group’s performance. g. Significant changes in the current reporting period The consolidated financial statements have been prepared using the same accounting policies as used in the annual financial statements for the year ended 30 June 2018, except for the adoption of AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments. On adoption of AASB 9 on 1 July 2018, the Group has changed the accounting for impairment losses for financial assets held at amortized cost and contract assets by replacing AASB 139’s incurred loss approach with a forward-looking expected credit loss (ECL) approach, and has calculated ECLs based on the Group’s historical credit loss experience, adjusted for forward- looking factors specific to the debtors and the economic environment. The Group has also entered hedge relationships under the standard’s hedge accounting requirements and reclassified financial assets per the classification of the new standard. The impact of adopting these changes are not material to the Group. The adoption of AASB 15 resulted in a change to the opening balance sheet as at 1 July 2018 as a result of accounting for our tolling contracts. The impact is a change in the timing of recognition of revenue where the Group enhances customer owned assets. Under these contracts revenue will be recognized progressively rather than at a single point of time under the predecessor accounting standard. The impact is as follows (modified retrospective transition approach): Contract assets: $161m Inventories: ($62m) Total current assets $99m Current liabilities $25m Equity $74m The impact of adoption of AASB 15 on the 30 June 2019 balance sheet is as follows: Contract assets: $182m Inventories: ($73m) Total current assets $109m Current liabilities $28m Equity $81m The change has no impact on cash flow but does increase deferred tax liabilities. See Note 2 for the updated Revenue policy. In the adoption of AASB 15, the Group has made use of the practical expedient to reflect the aggregate effect of all of the modifications that occurred before the beginning of the date of initial application.