12. Advances and investments

Advances  paid

Advances paid are recognised initially at fair value plus or minus relevant transaction  costs and are recognised in  the balance sheet when the  department becomes party to the contractual provisions of the financial instruments. Where the advances are provided with interest-free periods or  at concessional interest rates, they are  considered to have a fair value which is less than the amount  lent. This fair value is calculated  in accordance with Note 20.

Subsequently, advances paid are measured at amortised  cost using the effective interest method.

Loss allowances on advances paid  reflect either 12-month or lifetime expected credit losses depending  on whether there has been a significant increase  in credit risk since initial recognition.

Credit  risk exposure of advances paid

Advances paid relates to concessional  loans approved under the Farm Finance Concessional Loans Scheme  funded by the Australian Government.  Queensland Rural and Industry Development Authority (QRIDA) manages  these concessional loans on behalf of  the Northern Territory Government.

QRIDA has conducted  an impairment assessment in accordance with AASB 9 at the reporting date. No loans were identified as requiring impairment as a result  of the review.

Credit risk for the comparative year is assessed under AASB 139 and is based on objective evidence of impairment. No loss allowance was recorded for advances paid.

ANNUAL REPORT 2018-19 - DEPARTMENT OF PRIMARY INDUSTRY AND RESOURCES