b'< NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2019of financial position at cost, until such time as the asset isEMPLOYEE BENEFITScompleted and ready for its intended use. Work in progressShort-term employee benefitsis not depreciated, but tested for impairment annually. Once ready for its intended use an amount equal to the cost ofLiabilities for wages and salaries, including non-monetary the completed asset will be transferred to property, plantbenefits, annual leave and long service leave expected to and equipment, and accounted for in accordance with thebe wholly settled within 12 months of the reporting date consolidated entitys accounting policy for property, plant are measured at the amounts expected to be paid when the and equipment. liabilities are settled. Non-accumulating sick leave is expensed to profit or loss when incurred.IMPAIRMENT OF NON-FINANCIAL ASSETSOther long-term employee benefitsGoodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are testedThe liability for annual leave and long service leave not annually for impairment, or more frequently if eventsexpected to be wholly settled within 12 months of the or changes in circumstances indicate that they mightreporting date are recognised in non-current liabilities, be impaired. Other non-financial assets are reviewed forprovided there is an unconditional right to defer settlementimpairment whenever events or changes in circumstancesof the liability. The liability is measured as the present valueindicate that the carrying amount may not be recoverable. of expected future payments to be made in respect of services An impairment loss is recognised for the amount by which provided by employees up to the reporting date using the assets carrying amount exceeds its recoverable amount. the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of Recoverable amount is the higher of an assets fair value lessemployee departures and periods of service. Expected future costs of disposal and value-in-use. The value-in-use is thepayments are discounted using market yields at the reporting present value of the estimated future cash flows relating todate on national corporate bonds with terms to maturity and the asset using a pre-tax discount rate specific to the asset orcurrency that match, as closely as possible, the estimated cash-generating unit to which the asset belongs. Assets that dofuture cash outflows.not have independent cash flows are grouped together to form a cash-generating unit. Defined contribution superannuation expenseContributions to defined contribution superannuation plans TRADE AND OTHER PAYABLES are expensed in the period in which they are incurred.These amounts represent liabilities for goods and servicesShare-based paymentsprovided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-termEquity-settled share-based compensation benefits are provided nature they are measured at amortised cost and are notto employees. Equity-settled transactions are awards of shares, discounted. The amounts are unsecured and are usually paidor options over shares, that are provided to employees in within 30 days of recognition. exchange for the rendering of services.The cost of equity-settled transactions are measured at fair BORROWINGS value on grant date. Fair value is independently determined Loans and borrowings are initially recognised at the fairusing an amended Black-Scholes Merton model that takes into value of the consideration received, net of transaction costs.account the exercise price, the term of the option, an exercise They are subsequently measured at amortised cost using theprice multiple, the share price at grant date and expected effective interest method. price volatility of the underlying share, the expected dividend Where there is an unconditional right to defer settlement yield and the risk free interest rate for the term of the option, of the liability for at least 12 months after the reporting date, together with non-vesting conditions that do not determine the loans or borrowings are classified as non-current. whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken FINANCE COSTS of any other vesting conditions.Finance costs attributable to qualifying assets are capitalisedThe cost of equity-settled transactions are recognised as an as part of the asset. All other finance costs are expensed in theexpense with a corresponding increase in equity over the period in which they are incurred including interest on shortvesting period. The cumulative charge to profit or loss is term and long term borrowings. calculated based on the grant date fair value of the award, DONACO INTERNATIONAL LIMITED 2019 ANNUAL REPORT 47'