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Annual Financial Statements for year ended 30 June 2012
3 Income Recognition
Income is measured at the fair value of the consideration
received or receivable. Income is recognised when the
Council obtains control over the assets comprising the
income, or when the amount due constitutes an
enforceable debt, whichever first occurs.
Where grants, contributions and donations recognised as
incomes during the reporting period were obtained on the
condition that they be expended in a particular manner or
used over a particular period, and those conditions were
undischarged as at the reporting date, the amounts subject
to those undischarged conditions are disclosed in these
notes. Also disclosed is the amount of grants, contributions
and receivables recognised as incomes
in a previous reporting period which were obtained in
respect of the Council’s operations for the current reporting
period.
4 Cash, Cash Equivalents and other
Financial Instruments
Cash Assets include all amounts readily convertible to cash
on hand at Council’s option with an insignificant risk of
changes in value with a maturity of three months or less
from the date of acquisition.
Receivables for rates and annual charges are secured over
the subject land, and bear interest at rates determined in
accordance with the Local Government Act 1999. Other
receivables are generally unsecured and do not bear
interest.
All receivables are reviewed as at the reporting date and
adequate allowance made for amounts the receipt of
which is considered doubtful.
All financial instruments are recognised at fair value at the
date of recognition. Presentation and disclosure of
financial instruments can be found in Note 32.
5 Inventories
Inventories held in respect of stores have been valued by
using the weighted average cost on a continual basis, after
adjustment for loss of service potential.
6 Infrastructure, Property, Plant & Equipment
6.1 Initial Recognition
All assets are initially recognised at cost.
All non-current assets purchased or constructed are
capitalised as the expenditure is incurred and depreciated
as soon as the asset is held “ready for use”.
Cost is determined as the fair value of the assets given as
consideration plus costs incidental to the acquisition,
including architects’ fees and engineering design fees and
all other costs incurred. The cost of non-current assets
constructed by the Council includes the cost of all
materials used in construction, direct labour on the
project and an appropriate proportion of variable
and fixed overhead.
Capital works still in progress at reporting date are
recognised as other non-current assets and transferred
to infrastructure, property, plant and equipment when
ready for use.
For assets acquired at no cost or for nominal consideration,
cost is determined as fair value at the date of acquisition.
6.2 Materiality
Assets with an economic life in excess of one year are only
capitalised where the cost of acquisition exceeds
materiality. In determining materiality, regard is had to the
nature of the asset and its estimated service life.
6.3 Subsequent Recognition
Certain asset classes are revalued on a regular basis such
that the carrying values are not materially different from
fair value. For infrastructure and other asset classes where
no active market exists, fair value is determined to be the
current replacement cost of an asset less, where
applicable, accumulated depreciation calculated on the
basis of such cost to reflect the already consumed or
expired future economic benefits of the asset. Further
detail of existing valuations, methods and valuers are
provided in Note 17.
6.4 Depreciation of Non-Current Assets
Other than land, which is not a depreciable asset, all
infrastructure, property, plant and equipment assets
recognised are systematically depreciated over their useful
lives in a manner which reflects the consumption of the
service potential embodied in those assets.
Plant and equipment are depreciated using the diminishing
balance method. All other classes of assets are depreciated
using the straight line method. Depreciation is not charged
on non current contributed assets or non current assets
constructed by Council during the reporting period in
which they are acquired.
Major depreciation periods, which are reviewed annually,
are shown below.
• Buildings & Building Improvements
10-100 years
• Infrastructure – Roadways
20-80 years
• Infrastructure – Footways
50-80 years
• Infrastructure – Drainage
63 years
• Equipment
2-24years
• Furniture & Fittings
3-20 years
• Other (Library Book Stock)
4-7years
• Other (Waste Bins)
9-15 years
6.5 Impairment
Assets that have an indefinite useful life are not subject to
depreciation and are reviewed annually for impairment.
Assets that are subject to depreciation are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable
amount (which is the higher of the present value of future
cash outflows or value in use).
For assets whose future economic benefits are not
dependent on the ability to generate cash flows, and where
the future economic benefits would be replaced
if Council were deprived thereof, the value in use is the
depreciated replacement cost. In assessing impairment for
these assets, a rebuttable assumption is made that
the current replacement cost exceeds the original cost
of acquisition.
Where an asset that has been revalued and is subsequently
impaired; the impairment is first offset against such an
amount as stands to the credit of that
class of assets in the Asset Revaluation Reserve,
any excess being recognised as an expense.
Notes to the Financial Statements
For the year ended 30 June 2012