Cue Energy Resources Limited Notes to the financial statements 30 June 2023 Note 2. Significant accounting policies (continued) 8 Contract assets Contract assets represent rights to consideration for performance obligations satisfied to date, which will be recognised as trade receivables when the right to invoice becomes unconditional. Contract liabilities Contract liabilities represent the Consolidated Entity's obligation to transfer gas to customers and are recognised when a customer pays consideration or when a receivable is recognised reflecting its unconditional right to consideration before the Consolidated Entity has satisfied its performance obligations in respect of the transfer of the goods or services to the customer. The Consolidated Entity has performance obligations for the delivery of gas for which payment was received in advance and for gas not taken by its sole customer in the Dingo field, in respect of a take or pay arrangement in accordance with which the Consolidated Entity has the obligation to upon request provide gas in the contractually defined volumes which were not able to be consumed. The customer must take the future delivery of gas no later than 2035. If and when concluded that the customer's entitlements to take future gas deliveries within the contractually defined time, the relevant portion of the contract liability is derecognised. (o) Loans and borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. (p) Accounting policy for employee benefits The following liabilities arising in respect of employee benefits are measured at their nominal amounts: - wages and salaries and annual leave expected to be settled within twelve months of the reporting date; and - other employee benefits expected to be settled within twelve months of the reporting date. All other employee benefit liabilities expected to be settled more than 12 months after the reporting date are measured at the present value of the estimated future cash outflows in respect of services provided up to the reporting date. Liabilities are determined after taking into consideration estimated future increase in wages and salaries and past experience regarding staff departures. Related on-costs are included. (q) New or amended Accounting Standards and Interpretations adopted The Consolidated Entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. There was no impact upon adoption of these standards. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Note 3. Critical accounting estimates and judgements The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements in the application of accounting standards, make certain assumptions that affect the application of policies and consider and conclude on sources of and apply estimation uncertainties which affect the reported amounts of assets, liabilities, income and expenses. The judgements made, assumptions applied and the consideration of sources of estimation uncertainty, are based on the application of historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of concluding on the carrying values of assets and liabilities that may not be readily apparent from other sources. Actual results may differ from these estimates. These accounting policies have been consistently applied by each entity in the Consolidated Entity, and the judgements made, assumptions applied and consideration of sources of estimation uncertainty are reviewed on an ongoing basis. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below. 54 Cue Energy Resources Limited Annual Report 2023
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