Icon Energy Annual Report 2023 63 ICON ENERGY LIMITED AND ITS CONTROLLED ENTITIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2023 (o) (p) Foreign Currency Transactions and Balances (q) Leases - - - - - - - - - (r) Issued Capital These consolidated financial statements are presented in Australian dollars, which is the parent entity’s functional and presentation currency. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. NOTE 24 - STATEMENT OF ACCOUNTING POLICIES (Continued) Leases are recognisd as a right-of-use asset and a corresponding liability. Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Entity estimates the recoverable amount of the cash-generating unit to which the asset belongs. Functional and presentation currency Impairment of Non-Financial Assets The functional currency of each of the controlled entities is measured using the currency of the primary economic environment in which that entity operates. Right-of-use assets are measured at cost comprising the following: fixed payments (including in-substance fixed payments), less any lease incentives receivable variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date amounts expected to be payable by the Group under residual value guarantees the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. any lease payments made at or before the commencement date less any lease incentives received Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straightline basis. restoration costs. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. any initial direct costs, and The lease payments are discounted using the lessee’s incremental borrowing rate, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Issued capital is recognised at the fair value of the consideration received by the Consolidated Entity. Any transaction costs arising on the issue of shares are recognised directly in equity as a reduction of the share proceeds received. the amount of the initial measurement of lease liability Every six months, the directors review the carrying values of its non-financial assets which include exploration, evaluation and development expenditures and property, plant and equipment, to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed and included in profit or loss. Payments associated with short term leases and leases of low value assets are recognised in profit and loss on a straightline basis with a lease term of 12 months or less. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
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