Rangatira Investments Annual Report 2021 - Report - Page 45
Ra n g a t i ra An n u a l Re p ort 2021
Notes to the Consolidated
Financial Statements (continued)
For the year ended 31 March 2021
Note 6 Trade Receivables
Trade receivables without significant financing components are initially recognised at transaction cost and subsequently measured
at amortised cost. Impairment losses are calculated using the Expected credit loss - simplified approach, as permitted under NZ IFRS
9, which uses a lifetime expected loss allowance. Changes in the carrying amount of the allowance account are recognised in profit or
Trade receivables (I)
Allowance for doubtful debts
GST and other receivables
The average credit period on sales of goods is 45 days (2020: 44 days). No interest is charged on the trade receivables or on the
outstanding balances. The Group has provided fully for all receivables over 180 days because historical experience is such that
receivables that are past due beyond 180 days are generally not recoverable. Trade receivables between 40 days and 180 days are
provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past experience.
Included in the Group’s trade receivables balance are debtors that are past due over 30 days at the reporting date with a carrying
amount of $1,242,000 (2020: $1,750,000). The Group has not provided for these as there has not been a significant change in credit
quality and the Group believes the amounts are still considered recoverable. The Group does not hold any collateral over these
balances and the average age of these receivables is 68 days (2020: 68 days).
Before accepting any new customers, the Group uses an assessment criteria for potential customers’ credit quality and defines credit
limits by customer.
Amounts provided for during the year
(Increase)/decrease in allowance recognised in profit
Ageing of past due but not impaired trade receivables:
Movement in doubtful debts:
Balance at beginning of the year
Balance at the end of the year
In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from
the date credit was initially granted up to the reporting date. Accordingly, the Directors believe that there is no further credit provision
required in excess of the allowance for doubtful debts.