(r) Issued Capital (s) Interests in Joint Venture Operations (t) Leases Group as a Lessee (u) Earnings Per Share Basic Earnings Per Share Diluted Earnings Per Share (v) Parent Company Financial Information Investments in Subsidiaries 45 Karoon Gas Australia Ltd  Annual Report 2011 Ordinary shares are classified as equity. Cash received from shareholders and investors at the end of the reporting period, pending allotment and issue of fully paid  ordinary shares, is held as funds in escrow in the consolidated statement of financial position. Transaction costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of  any related income tax benefit, from the proceeds. Transaction costs are the costs that are incurred directly in connection with  the issue of new ordinary shares and which would not have been incurred had those ordinary shares not been issued. These  directly attributable transaction costs include registration and other regulatory fees, amounts paid to legal, accounting and other  professional advisers, printing costs and marketing costs. The costs of an equity raising that is abandoned are recognised as an expense in the consolidated statement of comprehensive  income. The proportionate interests in the assets, liabilities, revenue and expenses of a joint venture operation are incorporated in the  financial statements under the appropriate headings. The Group’s share of assets and liabilities employed in joint venture operations is set out in Note 23. The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires  an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the  arrangement conveys a right to use the asset. Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are  classified as operating leases. Operating lease payments (net of any incentives received from the lessor) are recognised as an  expense in the consolidated statement of comprehensive income on a straight-line basis over the financial period of the lease. Basic earnings per ordinary share is calculated by dividing the profit or loss attributable to owners of the Company, excluding any  costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the  financial year, adjusted for any bonus elements in ordinary shares issued during the financial year. Diluted earnings per ordinary share adjusts the figures used in the determination of basic earnings per ordinary share to take into  account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the  weighted average number of ordinary shares that would have been outstanding assuming the conversion of all dilutive potential  ordinary shares. The financial information for the Parent Company, Karoon Gas Australia Ltd, disclosed in Note 30 has been prepared on the same  basis as the consolidated financial statements, except as set out below: Investments in subsidiaries are accounted for at cost in the financial statements of Karoon Gas Australia Ltd. The Parent Company does not designate any investments in subsidiaries as being subject to the requirements of Australian  Accounting Standards specifically applicable to financial instruments. They are held for strategic and not trading purposes. Investments in subsidiaries and receivables from subsidiaries are tested for impairment in accordance with the accounting policy  described in Note 1(n).