The consolidated financial statements are presented in Australian dollars, which is the functional and presentation currency of Australian  Agricultural Company Limited and all its subsidiaries� (ii) Transactions and balances (i) Functional and presentation currency Transactions in foreign currencies are converted into Australian dollars by applying the exchange rates applicable at the date of the transactions�  Amounts payable and receivable in foreign currencies are converted into Australian dollars at the exchange rate ruling at the reporting date�  All differences arising on settlement or translation of amounts payable and receivable in foreign currencies are taken to the statement of profit  and loss� Cash and cash equivalents in the statement of financial position comprise cash at bank and in 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� Bank overdrafts are included within interest-bearing loans and borrowings in current liabilities on the statement of  financial position� Trade and other receivables are considered financial assets� They are recognised initially at the fair value of the amounts to be received and are  subsequently measured at amortised cost using the effective interest method, less an allowance for doubtful debts� These financial assets are  derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and we have transferred  substantially all the risks and rewards of ownership� We review the collectability of trade receivables on an ongoing basis at an operating unit level� Individual debts that are known to be uncollectible  are written off when identified� An allowance for doubtful debts is recognised to reduce the carrying amount of trade receivables when there is  objective evidence that we will not be able to collect the receivable� Financial difficulties of the debtor, default payments or debts significantly  overdue are considered indicators that the trade receivable may not be recoverable� The amount of the allowance for doubtful debts is the  receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate� Cash  flows relating to short-term receivables are not discounted if the effect of discounting is immaterial� The allowance for doubtful debts is recognised in the income statement within administration costs� When a trade receivable for which an  allowance for doubtful debts had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account�  Subsequent recoveries of amounts previously written off are credited against administration costs� Inventories and consumables held for use in our operations are valued at the lower of cost and net realisable value� Cost is determined on the  average cost basis and comprises the cost of purchase including transport cost� Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs  necessary to make the sale 58 Australian Agricultural Company Limited (f) Inventories and consumables (e) Trade and other receivables (d) Cash and cash equivalents 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Foreign currency translation NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONT For the three months ended 31 March 2013