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For the year ended 30 June 200
Reporting entity
City Care Limited is a wholly owned subsidiary of Christchurch City Holdings Limited and is a
company registered under the Companies Act 1993. The company is a Council Controlled Trading
Organisation as defined in Section 6 of the Local Government Act 2002.
The financial statements of City Care Limited have been prepared in accordance with the
requirements of the Companies Act 1993, the Financial Reporting Act 1993 and the Local
Government Act 2002.
Basis for preparation
The financial statements have been prepared on the historical cost basis modified to include the
revaluation of land. The reporting currency is New Zealand dollars.
Specific accounting policies
The following specific accounting policies which materially affect the measurement of financial
performance, cash flows and financial position are applied:
(a) Revenue
Service revenue is recognised by reference to the stage of completion of the transaction at
balance date.
Sales of goods are recognised when goods are delivered and title has passed.
Interest income is accrued on a time basis by reference to the principal outstanding and at the
effective interest rate applicable.
(b) Goods and Services Tax (GST)
All items in the statement of financial position are stated exclusive of GST, with the exception of
receivables and payables, which include GST. All items in the statement of financial performance
and statement of cash flows are stated exclusive of GST.
(c) Income tax
The income tax expense recognised for the year is based on the operating surplus before income
tax adjusted for permanent differences between accounting and taxable income.
Deferred tax, which is calculated on the comprehensive basis using the liability method, arises
from amounts of income or expense recognised for tax purposes in years different from those in
which they are dealt with in the financial statements.
A debit balance in the deferred taxation account is only carried forward to the extent that there is
virtual certainty of its recovery.
Income tax benefits arising from income tax losses are recognised only to the extent of
accumulated net credits from timing differences in the deferred taxation account unless there is
virtual certainty of their realisation.
(d) Receivables
Receivables are carried at their expected realisable value after providing for bad and doubtful debts
expected to arise in subsequent accounting periods. The provision for doubtful debts is based on
an assessment by management as to the collectability or otherwise of specific debts while bad
debts are written off in the period in which it is determined that the debts are uncollectable.
(e) Inventories
Inventories are stated at the lower of weighted average cost and net realisable value after due
consideration for excess and obsolete items.
(f) Work in progress
Work in progress is valued in accordance with FRS-14 with profits recognised when costs and
income to the contract can be reliably estimated. A foreseeable loss is recognised in the financial
statement of
accounting policies
