Urbanise.com Annual Report 2019

4. Significant accounting judgements, estimates and assumptions (continued) The calculation of the fair value of options and performance rights issued requires significant estimates to be made with regards to several variables such as volatility, dividend policy and the probability of options/performance rights reaching their vesting period. The Group measures the cost of equity settled share-based payments at fair value at the grant date using an appropriate valuation model considering the terms and conditions upon which the instruments were granted and expected vesting period. The estimations made are subject to variability that may alter the overall fair value determined. e. Development costs The Group capitalises costs for product development projects. Capitalised development costs have a finite life and are amortised on a systematic basis over the period beginning in the year following capitalisation and cease at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognised. Costs capitalised include direct payroll and payroll related costs of employees’ time spent on the software development projects. During the year the Group capitalised $695,807 (2018: $1,018,066) of development cost. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. At 30 June 2019, the carrying amount of capitalised development costs was $2,131,118 (2018: $1,730,123). f. Employee entitlements Management judgement is applied in determining the following key assumptions used in the calculation of current, long service leave and Gratuity at 30 June 2019: –– Future increases in wages and salaries; –– Future on cost rates; –– Experience of employee departures; and –– Experience of employee annual leave taken in relevant period. 5. Accounting Standards issued but not yet effective The AASB has issued several new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not to early adopt any of these new and amended pronouncements. The Group’s assessment of the new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below. AASB 16: Leases : Effective from 1 July 2019 AASB 16 will replace AASB 117: Leases and introduces a single lessee accounting model that will require a lessee to recognise right-of-use assets and lease liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Right-of-use assets are initially measured at their cost and lease liabilities are initially measured on a present value basis. Subsequent to initial recognition: –– right-of-use assets are accounted for on a similar basis to non-financial assets, whereby the right-of-use asset is accounted for in accordance with a cost model; and –– lease liabilities are accounted for on a similar basis as other financial liabilities, whereby interest expense is recognised in respect of the liability and the carrying amount of the liability is reduced to reflect lease payments made. Although a full assessment has yet to be carried out, the expectation is that the right of use asset and lease liability will be recorded on the balance sheet in respect of the Group’s portfolio of property leases, currently accounted for as operating leases. AASB Interpretation 23 Uncertainty over Income Tax treatments: Effective from 1 July 2019 AASB Interpretation 23 clarifies the application of recognition and measurement requirements of AASB 112 Income Taxes when there is uncertainty over income tax treatments. A full assessment is yet to be carried out. Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (continued) 57