Note 1. Summary of Significant Accounting Policies (continued) (s) Goods and services tax (GST)/Value added Tax (VAT) GST is applicable to Australia and reported through the Australian Taxation Office whilst VAT is applicable in Ecuador, Sweden and Finland. GST and VAT are similar tax instruments. Revenues, expenses and assets are recognised net of the amount of associated GST/VAT, unless the GST/VAT incurred is not recoverable from the respective taxation offices. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST/VAT receivable or payable. The net amount of GST/VAT recoverable from, or payable to, the respective taxation offices is included with other receivables or payables in the Statement of Financial Position. Cash flows are presented on a gross basis. The GST/VAT components of cash flows arising from investing or financing activities which are recoverable from, or payable to the respective taxation offices, are presented as operating cash flows. (t) Foreign currency transactions and balances (i) Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the Company’s functional and presentation currency. The functional currency of the Consolidated Entity’s foreign operations is primarily US Dollar as well as Euro and Swedish Krona. (ii) Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period end exchange rate. Exchange differences arising on the translation of foreign currency transactions are recognised in profit or loss. (iii) Group companies The results and the financial position of all the Group entities (none of which has a currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: – Assets and liabilities are translated at period-end exchange rates prevailing at the reporting date; – Income and expenses are translated at average exchange rates for the period; and – Retained profits are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on the translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the Statement of Financial Position. These differences are recognised in the profit or loss in the period in which the operation is disposed. (u) Application of new and revised Accounting Standards New and revised AASBs affecting amounts reported and/or disclosures in the financial statements In the current year, the Group has applied a number of new and revised AASBs issued by the Australian Accounting Standards Board (AASB) that are mandatorily effective for an accounting period that begins on or after 1 July 2021. The amendments did not have a significant impact on the Group’s financial statements. (v) New Accounting Standards issued but not yet effective There are no accounting standards that are not yet effective and that are expected to have a material impact to the Group in the current or future reporting periods and on foreseeable future transactions. 41 Sunstone Metals Limited Annual Report 2022 SUNSTONE METALS LIMITED ANNUAL REPORT 2022
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