Note 3. Critical accounting judgements, estimates and assumptions (continued) Estimation of useful lives of assets The Consolidated Entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the Consolidated Entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Incremental borrowing rate Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Consolidated Entity estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. Note 4. Operating segments The Consolidated Entity operates in the petroleum exploration industry within Australia and Cuba. The Board of Directors currently receive regular consolidated cash flow information as well as Consolidated Statement of Financial Position and Statement of Comprehensive Income information that is prepared in accordance with Australian Accounting Standards. The Board does not currently receive segmented Statement of Financial Position and Statement of Comprehensive Income information. The Board manages exploration activities of each permit area through review and approval of budgets, joint venture cash calls and other operational information. Information regarding exploration expenditure capitalised for each area is contained in Note 13. Note 5. Other income 30-June-23 $ 30-June-22 $ Grant (overpayment)/income – (688) Operator’s indirect expenses charge 2,595,344 – Receipt of sale proceeds from sale of permit – 10,391,856 Other income 2,595,344 10,391,168 Other income is recognised when it is received or when the right to receive payment is established. Note 6. Finance costs 30-June-23 $ 30-June-22 $ Bank’s fees 312,648 56,753 Interest expense 1,059 19 Finance costs 313,707 56,772 Notes to the Consolidated Financial Statements for the year ended 30 June 2023 48 Melbana Energy Limited Annual Report 2023
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