Depreciation Depreciation is an expense that arises from the consumption through wear or time of a produced physical asset. This expense is classified as a 'transaction' and so reduces the 'net result from transaction'. Effective interest method interest method The effective interest method is used to calculate the amortised cost of a financial asset or liability and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument, or, where appropriate, a shorter period. Financial asset asset A financial asset is any asset that is:

- a) cash
- b) an equity instrument of another entity
- c) a contractual right or statutory right:

- receive cash or another financial asset from another entity; or - receive cash or another financial asset from another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially - favourable to the entity; or

- d) a contract that will or may be settled in the entity's own equity instruments and is:

- non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity - non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments; or a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial - asset for a fixed number of the entity’s own equity instruments.

Financial instrument instrument A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets or liabilities that are not contractual (such as statutory receivables or payables that arise as a result of statutory requirements imposed by governments) are not financial instruments. Financial liability liability A financial liability is any liability that is:

- a) a contractual or statutory obligation:

- deliver cash or another financial asset to another entity; or - deliver cash or another financial asset to another entity; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially - unfavourable to the entity; or

- b) a contract that will or may be settled in the entity's own equity instruments and is:

- non-derivative for which the entity is or may be obliged to deliver a variable number of the entity's own equity - non-derivative for which the entity is or may be obliged to deliver a variable number of the entity's own equity instruments; or

- derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial - derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments. For this purpose the entity's own equity instruments do not include instruments that are themselves contracts for the future receipt or delivery of the entity's own equity instruments.

Grants and other transfers and other transfers Transactions in which one unit provides goods, services, assets (or extinguishes a liability) or labour to another unit without receiving approximately equal value in return. Grants can either be operating or capital in nature. While grants to governments may result in the provision of some goods or services to the transferor, they do not give the transferor a claim to receive directly benefits of approximately equal value. For this reason, grants are referred to by the AASB as involuntary transfers and are termed non reciprocal transfers. Receipt and sacrifice of approximately equal value may occur, but only by coincidence. For example, governments are not obliged to provide commensurate benefits in the form of goods or services to particular taxpayers in return for their taxes.

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DJPR Annual Report 2018–19