ITF

19 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) When an unrecognised firm commitment is designated as a hedged item, the subsequent cumula ve change in the fair value of the firm commitment a ributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in income and expenditure. The changes in the fair value of the hedging instrument are also recognised in income and expenditure. Cash flow hedges The effec ve por on of the gain or loss on the hedging instrument is recognised directly in equity, while any ineffec ve por on is recognised immediately in income and expenditure. Amounts taken to equity are transferred to income and expenditure when the hedged transac on affects income and expenditure, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts taken to equity are transferred to the ini al carrying amount of the non-financial asset or liability. If the forecast transac on or firm commitment is no longer expected to occur, amounts previously recognised in equity are transferred to income and expenditure. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designa on as a hedge is revoked, amounts previously recognised in equity remain in equity un l the forecast transac on or firm commitment occurs. Hedges of a net investment Hedges of a net investment in a foreign opera on, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument rela ng to the effec ve por on of the hedge are recognised directly in equity while any gains or losses rela ng to the ineffec ve por on are recognised in income and expenditure. On disposal of the foreign opera on, the cumula ve value of any such gains or losses recognised directly in equity is transferred to income and expenditure. 6. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS The prepara on of the ITF's financial statements requires management to make judgements, es mates and assump ons that affect the reported amounts of revenues, expenses, assets and liabili es, and the disclosure of con ngent liabili es, at the repor ng date. However, uncertainty about these assump ons and es mates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future. Judgements In the process of applying the ITF's accoun ng policies, management has made the following judgements, apart from those involving es ma ons, which have the most significant effect on the amounts recognised in the financial statements: Trade receivables valua on – provisions have been made for those trade receivables where the recoverability is considered uncertain. Provisions – the provision for dilapida ons has been calculated using an es mate for the costs that would be payable under the terms of the exis ng lease. Taxa on – some of the ITF's subsidiaries are subject to rou ne tax audits and also a process whereby tax computa ons are discussed and agreed with the proper authori es. Whilst the ul mate outcome of such tax audits and discussions cannot be determined with certainty, management es mates the level of provisions required for both current and deferred tax assets on the basis of professional advice on the nature of current discussions with the authority concerned. Es mates and assump ons The key sources of es ma on uncertainty at the balance sheet date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabili es within the next financial year relate to the valua on of hedging instruments and are discussed in note 5(n). NOTES (forming part of the financial statements)

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