ANNUAL REPORT 2007-2008 CITY OF GREATER GEELONG

CITY OF GREATER GEELONG
NOTES TO THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2008
1 Significant Accounting Policies (cont’d)
(b) Revenue recognition (cont’d)
Interest Income
Interest is recognised as revenue on a proportional basis
when the payment is due, the value of the payment is
notified, or the payment is received, whichever first
occurs.
(c) Depreciation and amortisation of non-current assets
All non current assets having limited useful lives are
systematically depreciated over their useful lives to the
Council in a manner which reflects consumption of the
service potential in those assets. Estimates of remaining
useful lives and residual values are made on a regular
basis with major asset classes reassessed annually.
Depreciation rates and methods are reviewed annually.
Where infrastructure assets have separate identifiable
components that are subject to regular replacement, these
components are assigned distinct useful lives and residual
values and a separate depreciation rate is determined for
each component.
Road earthworks are not depreciated because they have
an indefinite useful life.
Depreciation is provided on a straight line basis using a
range of rates which are reviewed annually.
Major depreciation periods used are listed and are
consistent with the prior year:
Buildings
Plant and Equipment
Heavy Plant and Equipment,
Commercial Vehicles
Furniture and Fittings
Personal Computers
Computer Equipment
Software
Light Motor Vehicles
Infrastructure
Spray Seal
Asphalt Seal
Pavement
Drainage
Kerbs and Channel
Footpaths and Bike paths
Recreation
(d) Repairs and maintenance
Period
20-100 years
10 years
10 years
3 years
4-5 years
4 years
6.67 years
12 years
25 years
80 years
100 years
60 years
50 years
7-80 years
Routine maintenance, repair costs, and minor renewal
costs are expensed as incurred. Where the repair relates
to the replacement of a component of an asset and the
cost exceeds the capitalisation threshold the cost is
capitalised and depreciated. The carrying value of the
replaced asset is expensed.
(e) Borrowing costs
Borrowing costs are recognised as an expense in the
period in which they are incurred.
Borrowing costs include interest on bank overdrafts,
interest on borrowings, and finance lease charges.
(f) Recognition and measurement of assets
Acquisition
The purchase method of accounting is used for all
acquisitions of assets, being the fair value of assets
provided as consideration at the date of acquisition
plus any incidental costs attributable to the acquisition.
Non-monetary assets received in the form of grants or
donations or gifted assets are recognised as assets and
revenues at their fair value at the date of receipt.
Where assets are constructed by Council, cost includes all
materials used in construction, direct labour, borrowing
costs incurred during construction, and an appropriate
share of directly attributable variable and fixed overheads.
Fair value is the amount for which the asset could be
exchanged between knowledgeable willing parties in an
arm's length transaction. Where there is no market,
depreciated replacement value approximates fair value.
In accordance with Council's Asset Accounting Policy, the
threshold applied when recognising assets within an
applicable asset class is $1,000 and is consistent with
the prior year.
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