Significant accounting policies Revenue Revenue is measured at the fair value of consideration received or receivable. Revenue from the Crown The Commission is primarily funded through revenue received from the Ministry of Justice for the provision of outputs set out in the Output Agreement signed by the Chief Commissioner and the Minister of Justice. Revenue from the Crown is recognised as revenue when earned and is reported in the financial period to which it relates. Other income Other income is received from the supply of contract work; grants for specific activities; and the provision of advice and educational workshops to third parties. Other income is recognised at the time the product or service is provided to the client or, in the case of grant income, when the conditions of the grant have been met. Leases Finance leases A finance lease is a lease that transfers to the lessee substantially all of the risks and rewards incidental to ownership of an asset whether or not title is eventually transferred. At the commencement of the lease term, finance leases are recognised as assets and liabilities in the statement of financial position at the lower of the fair value of the leased item or the present value of the minimum lease payments. The finance charge is charged to the surplus or deficit in the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability. The amount recognised as an asset is depreciated over its useful life. If there is no certainty as to whether the Commission will obtain ownership at the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life. Interest Operating leases Interest income is recognised using the effective interest method. Interest income on an impaired financial asset is recognised using the original effective interest rate. An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term. Project costs Costs that are directly attributable to a project activity are reported in the statement of comprehensive income as project expenditure. This includes the cost of staff travel where the primary purpose of the travel relates to the project activity. Grant expenditure Discretionary grants are those grants where the Commission has no obligation to award on the receipt of a grant application and are recognised as expenditure when approved by the Commission and the approval has been communicated to the applicant. Lease incentives received are recognised in the surplus or deficit in the statement of comprehensive income over the lease term as an integral part of the total lease expense. Foreign currency transactions Foreign currency transactions are translated into New Zealand dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the surplus or deficit in the statement of comprehensive income. 77