115 115 AUSTRALIAN SPORTS COMMISSION NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS For the year ended 30 June 2017 Income is recognised on an effective interest rate basis. Held-to-maturity investments Term deposits held by the Commission are classified as ‘held-to-maturity investments’ and are initially recognised at fair value. Term deposits are subsequently recorded at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis. Loans and receivables Loans, trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate. Loans and other receivables provided on more favourable terms than the borrower could obtain in the market place contain a concessional discount. The concessional loan is initially recognised at fair value and the difference between notional and fair values is expensed upon initial recognition, if material. Concessional loans are subsequently amortised using the effective interest rate method. Impairment of financial assets Financial assets are assessed for impairment at the end of each reporting period. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income. Market Risk – Interest rates The ASC is exposed to interest rate risk primarily from interest bearing assets. The interest-bearing items on the Commission's Statement of Financial Position are cash, loans and term deposits. Cash on deposit is held in a bank account with a floating interest rate. The investments bear fixed interest rates and will not fluctuate due to changes in the market interest rate. The loans attract a floating interest rate. A +/- 200 basis point change is deemed to be reasonably possible and is used when reporting interest rate risk. The method used to arrive at the possible risk of +/- 200 basis point was based on both statistical and non-statistical analysis. The statistical analysis has been based on the cash rate for the past five years issued by the Reserve Bank of Australia (RBA) as the underlying dataset. This information is then revised and adjusted for reasonableness under the current economic circumstances. The ASC's sensitivity to a movement in interest rates of +/- 200 basis points and the effect on net costs of services and equity for 2016-17 is negligible. 1.11 Financial liabilities Supplier and other payables are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield