71 AGL Energy Limited Annual Report 2012 (i) Jointly controlled operations and assets (j) Foreign currency Functional and presentation currency (m) Inventories (n) Financial assets Foreign currency transactions and balances Financial assets at fair value through profit or loss Foreign operations Available-for-sale financial assets (k) Cash and cash equivalents (l) Trade and other receivables Loans and receivables The consolidated entity has certain contractual arrangements with  other venturers to engage in joint venture activities that do not  give rise to a jointly controlled entity. These arrangements involve  the joint ownership of assets dedicated to the purposes of the joint  venture. The assets are used to derive benefits for the venturers. The interests of the consolidated entity in unincorporated joint  ventures are brought to account by recognising in the financial  statements under the appropriate categories, the consolidated  entity’s proportionate share of joint venture revenues, expenses,  assets and liabilities. The functional and presentation currency of AGL Energy Limited  and its Australian subsidiaries is Australian dollars. Transactions in foreign currencies are initially recorded in the  functional currency by applying the exchange rates ruling at  the date of the transaction. Monetary assets and liabilities  denominated in foreign currencies are retranslated at the  exchange rate ruling at the end of the reporting period.  Non-monetary items carried at fair value that are denominated in  foreign currencies are retranslated at the exchange rates ruling at  the date when the fair value was determined. Non-monetary items  that are measured in terms of historical cost in a foreign currency  are not retranslated. Foreign exchange differences arising on translation are recognised  in the income statement in the period in which they arise except  for exchange differences on transactions entered into in order  to hedge certain foreign currency risks (refer to Note 1(ab)). On consolidation, the assets and liabilities of the consolidated  entity’s foreign operations are translated into Australian dollars at  exchange rates ruling at the end of the reporting period. Income  and expense items are translated at the average exchange rates  for the period. Exchange differences arising on translation are  recognised directly in equity in the foreign currency translation  reserve. Such exchange differences are reclassified to profit or  loss in the period in which the foreign operation is disposed. Cash and cash equivalents comprise cash at bank and on hand and  short-term deposits with an original maturity of three months or  less that are readily convertible to known amounts of cash and  which are subject to an insignificant risk of changes in value.  For the purposes of the statement of cash flows, cash and cash  equivalents consist of cash and cash equivalents as defined above,  net of outstanding bank overdrafts.  Trade and other receivables are recognised at amortised cost, less  an allowance for doubtful debts. Trade receivables are generally  due for settlement within 30 days. Collectibility of trade receivables is reviewed on an ongoing basis.  An allowance for doubtful debts is recognised when there is  objective evidence that the consolidated entity will not be able to  collect all amounts due. Financial difficulties of the debtor, default  payments or debts overdue are considered objective evidence of  impairment. The amount of the allowance is the difference  between the asset’s carrying amount and the present value of  estimated future cash flows.  Loans and receivables are non-derivative financial assets with fixed  or determinable payments that are not quoted in an active market.  Loans and receivables are measured at amortised cost using the  effective interest method, less any impairment. They are included  in current assets, except for those with maturities greater than  12 months after the end of the reporting period which are classified  as non-current assets. Loans and receivables are included in trade  and other receivables and other financial assets in the statement of  financial position. The amount of the impairment loss is recognised in the income  statement within other expenses. When a trade receivable is  uncollectible, it is written off against the allowance account.  Subsequent recoveries of amounts previously written off are  credited against other expenses in the income statement. Unbilled revenue represents estimated gas and electricity services  supplied to customers but unbilled at the end of the  reporting period. Stocks and materials are valued at the lower of cost and estimated  net realisable value. Costs, including an appropriate portion of fixed  and variable overhead expenses, are assigned to inventory on hand  by the method most appropriate to each particular class of  inventory, with the majority being valued on a first-in-first-out  basis. Finished goods includes gas inventory. All financial assets are recognised and derecognised on trade date  where the purchase or sale of a financial asset is under a contract  whose terms require delivery of the financial asset within the  timeframe established by the market concerned, and are initially  measured at fair value, plus transaction costs, except for those  financial assets classified as at fair value through profit or loss,  which are initially measured at fair value. Financial assets are classified into the following specified categories:  financial assets ‘at fair value through profit or loss’, ‘available-for- sale’ financial assets, and ‘loans and receivables’. The classification  depends on the nature and purpose of the financial assets and is  determined at the time of initial recognition. Financial assets classified as held for trading are included in the  category ‘financial assets at fair value through profit or loss’.  Financial assets are classified as held for trading if acquired  principally for the purpose of selling in the short-term. Derivatives  are also classified as held for trading unless they are designated as  effective hedging instruments. Gains or losses on financial assets  held for trading are recognised in profit or loss and the related  assets are classified as current assets in the statement of financial  position. Fair value is determined in the manner described in  Note 53. Listed shares held by the consolidated entity that are traded in an  active market are classified as available-for-sale and are stated  at fair value. Fair value is determined in the manner described in  Note 53. Gains and losses arising from changes in fair value are  recognised directly in other comprehensive income and  accumulated in the investments revaluation reserve, with the  exception of impairment losses, which are recognised in profit or  loss. Where the investment is disposed of or is determined to be  impaired, the cumulative gain or loss previously accumulated in  the investments revaluation reserve is reclassified to profit or loss.