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DURBAN UNIVERSITY OF TECHNOLOGY ANNUAL REPORT 2020
DURBAN UNIVERSITY OF TECHNOLOGY
BAN UNIVERSITY OF TECHNOLOGY
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020
1. ACCOUNTING POLICIES (continued)
1.5 Significant accounting judgements, estimates and assumptions (continued)
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the statement of financial position or disclosed in the financial statements cannot be measured based on quoted prices in active markets, the fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Revenue from contracts with customers
The University applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:
Principal versus agent considerations
The University enters into collaborative research agreements between itself, funders and other Universities. Under these agreements, the University receives funds from the funders, and pays it over to other Universities when performance obligations have been met. The University recognises revenue to the extent that it controls the research services to be provided to the funders, and in such instances, the University is the principal. For the services provided by other Universities, the University has determined that it does not control the research services provided by the other Universities before they are transferred to the funders. The following factors indicate that the University does not control the services before they are transferred to the funders.
 The University is not primarily responsible for fulfilling the promise to provide the research services;
 The University has no discretion to determine the price of the services.
Therefore, the University determined that it is an agent in these contracts and did not recognise revenue relating to these contracts.
1.6 Basis of consolidation
The consolidated financial statements comprise the financial statements of the University and its subsidiaries as at December 31, 2020.
Subsidiaries are entities controlled by the University. Control exists when the University has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
The separate financial statements of the subsidiaries are prepared for the same reporting period as the University, using consistent accounting policies.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
The consolidated financial statements incorporate the assets, liabilities and trading operations of the following University wholly owned controlled entities:
 Maxelect Investments Proprietary Limited;
 Melrose Properties Proprietary Limited; and
 Durban University of Technology Proprietary Limited.