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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)
1.20 IFRS 16 Leases (“IFRS 16”) – lessees and lessors (continued)
All leases that end within 12 months of the date of initial application are accounted for as short-term leases and the amounts are expensed to net surplus. Initial direct costs relating to leases under IFRS 16 on the date of initial application have not been capitalised to the right-of-use assets.
On the commencement of the lease, the University recognises a right-of-use asset and a lease liability. The right-of-use asset is initially measured at the carrying amount of the lease liability plus any initial direct costs incurred by the University. Adjustments for lease incentives, payments at or commencement of the lease and restoration obligations are added to the carrying amount of the right-of-use asset where applicable.
After lease commencement, the University measures the right-of-use asset at the cost less accumulated depreciation and impairment. The University assesses whether the right-of-use assets are impaired applying IAS 36 Impairment of Assets on an annual basis.
The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease or, where this cannot be determined, at the University’s incremental borrowing rate. After lease commencement, the University measures the lease liability by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made.
Lease modifications are accounted for as separate leases if the modification increases the scope of the lease by adding the right to use one or more underlying assets and the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope. Lease modifications that do not give rise to a separate lease are accounted for by adjusting the right-of-use asset and lease liability.
Impact on Lessor Accounting
The requirements for lessor accounting have remained largely unchanged. Under IFRS 16, a lessor continues to classify leases as either finance leases or operating leases and account for those two types of leases.
1.21 Accumulated funds
The consolidated income statement and the consolidated statement of changes in funds are prepared on a segmented basis in the manner required in terms of section 41 of the Higher Education Act, (Act No. 101 of 1997), as amended. This is not in terms of IFRS 8: Operating Segments.
Accumulated funds are the equity of the University and is categorised as follows:
 Council controlled funds
 Restricted funds (including residence funds)
 Fair value reserve
Council controlled funds
These funds arise from income or surplus, which is available to the Council to fund activities of the University. These funds are under the absolute discretion and control of Council. These funds are divided into two categories:
 Designated use funds - are funds that have been committed by Council for capital and operational
projects.
 Undesignated use funds - are funds available to Council to resource activities of the University.
Restricted use funds
These funds comprise of income received by the University from external sources, the use of which is legally beyond the control of Council. Such funds include specific donations and other income where the use of these funds are directed and specified.
DURBAN UNIVERSITY OF TECHNOLOGY ANNUAL REPORT 2020
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