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stand alone taxpayer approach, consistent
with the requirements of Interpretation 1052,
in determining the appropriate amount of
current taxes and deferred taxes to allocate
to members of the income tax consolidated
group. In addition to its own current and
deferred tax amounts, Australian Rail Track
Corporation Ltd also recognises the current
tax liabilities (or assets) and the DTAs arising
from unused tax losses and unused tax credits
assumed from controlled entities in the tax
consolidated group.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities
are recognised as amounts receivable from
or payable to other entities in the Group.
Any difference between the amounts assumed
and amounts receivable or payable under the
tax funding agreement are recognised as a
contribution to (or distribution from) wholly
owned tax consolidated entities.
(l) Leases
Group as a lessee
Leases of property, plant and equipment
where the Group, as lessee, has substantially
all the risks and rewards of ownership are
classified as finance leases. Finance leases are
capitalised at the lease’s inception at the fair
value of the leased property or, if lower, the
present value of the minimum lease payments.
The corresponding rental obligations, net of
finance charges, are included in other short
term and long term payables. Each lease
payment is allocated between the liability and
finance cost. The finance cost is charged to
profit or loss over the lease period so as to
produce a constant periodic rate of interest
on the remaining balance of the liability
for each period. The property, plant and
equipment acquired under finance leases is
depreciated over the asset’s useful life or over
the shorter of the asset’s useful life and the
lease term if there is no reasonable certainty
that the Group will obtain ownership at the
end of the lease term.
Leases in which substantially all the risks and
rewards of ownership are not transferred to
the Group as lessee are classified as operating
leases (note 15(b)). Payments made under
operating leases (net of any incentives
received from the lessor) are charged to the
consolidated income statement on a straight
line basis over the period of the lease.
Group as a lessor
Leases in which the Group retains substantially
all the risks and benefits of ownership of the
leased asset are classified as operating leases.
Initial direct costs incurred in negotiating an
operating lease are added to the carrying
amount of the leased asset and recognised
as an expense over the lease term on the
same basis as rental income.
(m) Inventories
Inventories are valued at lower of cost and
net realisable value. Cost is assigned on a
first in first out basis.
(n) Property, plant and
equipment
Fair Value
The fair value for infrastructure assets is
calculated using the income method approach,
whereby the measurement reflects current
market expectations of future cashflows
discounted to their present value for each
asset grouping that would be considered
reasonable by a normal market participant.
The estimated future cash flows are
discounted to their present value using a post-
tax discount rate that reflects current market
assessments of the time value of money and
the business risk.
Fair value assessments are only applied
to infrastructure assets on the basis that
non-infrastructure such as motor vehicles,
information technology and other non-
infrastructure assets are transferable within
NOTE 21 (CONTINUED)
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
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