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Accounting policy
Property, plant and equipment
Infrastructure is valued on a fair value basis while all non-infrastructure is on a cost basis and
therefore is subject to an impairment/revaluation assessment.
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 not applied to non-infrastructure assets on the basis that these assets
such as motor vehicles, information technology and other non-infrastructure assets are transferable
within the Group and have a short life and a ready market. The written down value of these assets
is in line with their fair value. All other property, plant and equipment are stated at historical cost less
accumulated depreciation, and any accumulated impairment. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Revaluation
The Group’s infrastructure assets were revalued as at 30 June 2017 as a result of the fair value
assessment. Infrastructure assets are shown at fair value (inclusive of revaluations and impairments)
less accumulated depreciation. Any accumulated depreciation at the date of revaluation is eliminated
against the gross carrying amount of the asset and the net amount is restated to the revalued
amount of the asset
Any revaluation increment is credited to the asset revaluation reserve included in the equity section
of the consolidated balance sheet, except to the extent that it reverses a revaluation decrement
of the same asset previously recognised in the consolidated income statement, in which case the
increase is recognised in the consolidated income statement (net of tax). Revaluation increments
and decrements recognised are allocated to the infrastructure asset carrying amounts within the
asset grouping on a pro rata basis.
At the commencement of the application of Australian International Financial Reporting Standards
the Group has elected that the deemed cost of assets on hand at 30 June 2005 is the revalued
amount of those assets. Any accumulated depreciation as at the revaluation date is eliminated
against the gross carrying amount of the asset and the net amount is restated to the revalued
amount of the asset. Items of property, plant and equipment are either derecognised on disposal
or when no further future economic benefits are expected from its use. Gains and losses on
disposals are determined by comparing proceeds with the carrying amount and are included in the
consolidated income statement. Upon disposal or derecognition, any revaluation reserve relating to
the asset is transferred to retained earnings.
Impairment
The carrying amounts of the Group’s
non-financial assets, other than inventories, deferred tax assets and infrastructure assets, are
reviewed at each reporting date to determine whether there is any indication of impairment. If
any indication exists, then the asset’s recoverable amount is estimated. An impairment expense is
recognised if the carrying amount of an asset or cash generating unit (CGU) exceeds it recoverable
amount. As the Group applies fair value assessment to asset groupings including most non-financial
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NOTE 7
NON-FINANCIAL ASSETS AND LIABILITIES (CONTINUED)