SYDNEY PORTS CORPORATION ANNUAL REPORT 12

52
Sydney PortS CorPoration
noteS to the FinanCiaL StateMentS
note 2. SUmmary of SignifiCant aCCoUnting PoliCieS
(ContinUed)
(iv) Valuation of buildings
Non-specialised buildings, which include commercial and
general purpose buildings for which there is a secondary
market, are valued at fair value. Specialised buildings are
designed for a specific, limited purpose. Where there are
no feasible alternative uses for such buildings, they are
valued at market buying price, the best indicator of which is
the replacement cost of the remaining economic benefits.
Heritage buildings are valued at fair value. Fair value is
represented by market value for existing use, because there
are few or no feasible alternative uses for such buildings.
(v) Revaluation of property, plant and equipment
Revaluations are made with sufficient regularity to ensure
that the carrying amount of property, plant and equipment
does not materially differ from fair value at the reporting
date. Where the Corporation revalues non-current assets
by reference to current prices for assets newer than those
being revalued (adjusted to reflect the present condition of
the assets), the gross amount and accumulated
depreciation are separately restated.
Revaluation increments are credited directly to the asset
revaluation reserve, except that, to the extent that an
increment reverses a revaluation decrement for an asset
previously recognised as a loss in profit or loss, the
increment is recognised as a gain in profit or loss.
Revaluation decrements are recognised immediately in
profit or loss, except that they are debited directly to the
asset revaluation reserve to the extent that a credit exists in
the asset revaluation reserve in respect of the asset. Assets
acquired or constructed since the last revaluation are
valued at cost.
Any revaluation reserve amount in respect of an item of
property, plant and equipment is transferred directly to
retained earnings on disposal.
The most recent revaluation of property, plant and
equipment by the Corporation was completed at 30 June 2012
and was based on independent assessments.
The revaluation included the following guidelines:
■■ Assets acquired within 12 months of the revaluation date
were assumed to have current values and were excluded
from the revaluation process.
■■ Where one asset in a class was revalued, all assets in
that class were revalued.
■■ Property, plant and equipment (excluding land) was
valued based on the estimated depreciated replacement
cost of the most appropriate modern equivalent
replacement facility having a similar service potential
to the existing asset.
■■ Land was valued on an existing-use basis, subject to
any restrictions or enhancements since acquisition.
Sydney PortS CorPoration finanCial rePort 2011/12
(vi) Impairment
The Corporation assesses at each reporting date whether
there is any indication that a cash generating unit, or an
asset within a cash generating unit, may be impaired. If
such an indication exists, the Corporation estimates the
recoverable amount. An impairment loss is recognised
where the carrying amount of the asset or cash-generating
unit exceeds the recoverable amount. Impairment losses
are recognised in profit or loss except for assets under
revaluation as the impairment loss will first be recognised
through each asset’s revaluation reserve prior to
recognition in profit or loss.
(i) Intangible assets
Intangible assets acquired separately are initially measured
at cost. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any
accumulated impairment loss. The Corporation’s intangible
assets relate to software and easements.
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is
recognised in profit or loss as incurred.
Easements relate to the Corporation’s interest in land.
Easements are recognised using the historic cost method
rather than fair value as it is assumed there is no active
market for easements.
In-house software development costs are capitalised, while
other costs (including research costs) are expensed in the
statement of comprehensive income in the year in which
the expenditure is incurred. Useful lives are examined on
an annual basis and adjustments, where applicable, are
made on a prospective basis. The Corporation’s software
intangible assets have finite lives and are amortised on a
straight-line basis.
(j) Depreciation and amortisation of assets
Depreciation and amortisation have been calculated on
depreciable assets, using rates estimated to write off the
assets over their remaining useful lives on a straight-line
basis. Land assets have been treated as non-depreciable.
The useful lives of assets were reassessed during the
year with no material changes required. The expected
depreciable lives of new depreciable assets at 30 June 2012
and 2011 are:
■■ Buildings 10 to 50 years
■■ Roadways and bridges 20 to 100 years
■■ Wharves, jetties and breakwaters 10 to 100 years
■■ Plant 2 to 50 years
■■ Intangibles – software 3 to 6 years
(k) Capitalisation of assets
Assets in excess of $1,000 are capitalised where they are
expected to provide future economic benefits for more than
one reporting period. Only those assets completed and
ready for service are taken to the property, plant and
equipment or intangible assets accounts. The remaining
capital expenditures are carried forward as construction
in progress and are included in property, plant and
equipment in the statement of financial position.