Note 1. Summary of Material Accounting Policies continued (ii) Other long-term employee benefits Provision is made for employees’ long service leave not expected to be settled in full within 12 months after the end of the reporting period in which the employees’ render the services. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. (iii) Retirement benefit obligations The Group contributes to various defined contribution superannuation funds for its employees. Contributions to the funds are recognised as an expense as they become payable. (iv) Share-based payments Share-based compensation benefits are provided to employees via the employee performance rights plan, and options approved by the Board from time to time. The fair value of options and performance rights granted is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the Directors or employees become unconditionally entitled to the options or performance rights. The fair value at grant date is independently valued using a Trinomial or Monte Carlo pricing model. The cumulative expense recognised between grant date and vesting date is adjusted to reflect the Directors’ best estimate of the number of options or performance rights that will ultimately vest because of internal conditions of the options or performance rights, such as the employee having to remain with the Company until vesting date, or such that employees are required to meet internal targets. No expense is recognised for options/performance rights that do not ultimately vest because internal conditions are not met. An expense is still recognised for options/performance rights that do not ultimately vest because a market condition was not met. (p) Contributed equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (q) 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 and Sweden. 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. (r) 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 Group’s foreign operations is primarily US Dollars. (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. 43 Sunstone Metals Limited Annual Report 2024
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