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CHESTERFIELD SKIP HIRE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.Accounting policies (continued)
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities such as bank and cash balances, trade and other accounts receivable and payable, loans from banks and other third parties and loans to and from related parties.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at the transaction price and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade payables or receivables, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Tax is recognised in the Statement of Income and Retained Earnings.
The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date in the countries where the Company operates and generates income.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant judgements
A critical judgement in preparing the financial statements was the accounting treatment of the landfill site, which has to date been shown as a tangible fixed asset at cost. Whilst the landfill site is let out and the Company receives rental income, this is on an informal basis as well as not being at a market level of rent, and is to the Company's immediate parent undertaking. Given there is no formal letting agreement in place, in addition to the unusual nature of the landfill site, the director does not consider it appropriate to treat this as an investment property and hold this at fair value. The landfill site therefore continues to be treated as a tangible fixed asset valued at cost.
There are no critical accounting estimates and assumptions required in the preparation of the financial statements.
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The average monthly number of employees, including directors, during the year was 0 (2019 - 0).
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