TOURISM VICTORIA ANNUAL REPORT

notes to the financial statements
30 june 2008 (continued)
Note 1. Summary of Accounting Policies (CONTINUED)
Capital asset charge
The capital asset charge represents the opportunity cost
of capital invested in the non-current physical assets used
in the provision of outputs. The charge is calculated on the
budgeted carrying amount of non-current physical assets.
Finance costs
Finance costs are recognised as expenses in the period
in which they are incurred and include:
• interest on bank overdrafts and short-tem and
long-term borrowings;
• amortisation of discounts or premiums
relating to borrowings;
• amortisation of ancillary costs incurred in connection
with the arrangement of borrowings;
• finance lease charges; and
• the increase in financial liabilities and non-employee
provisions due to the unwinding of discounts to reflect
the passage of time.
Impairment of assets
Intangible assets with indefinite useful lives (and intangible
assets not yet available for use) are tested annually for
impairment (i.e. as to whether their carrying value exceeds
their recoverable amount) and whenever there is an
indication that the asset may be impaired. All other assets are
assessed annually for indications of impairment, except for
financial assets (refer Note 1(h)).
If there is an indication of impairment, the assets concerned
are tested as to whether their carrying value exceeds
their recoverable amount. Where an asset’s carrying value
exceeds its recoverable amount, the difference is written
off by a charge to the operating statement except to the
extent that the write down can be debited to an asset
revaluation reserve amount applicable to that class of asset.
It is deemed that, in the event of the loss of an asset, the
future economic benefits arising from the use of the asset
will be replaced unless a specific decision to the contrary
has been made. The recoverable amount for most assets
is measured at the higher of depreciated replacement
cost and fair value less costs to sell. Recoverable amount
for assets held primarily to generate net cash inflows is
measured at the higher of the present value of future cash
flows expected to be obtained from the asset and fair value
less costs to sell.
Supplies and services
Supplies and services generally represent cost of goods sold
and the day-to-day running costs, including maintenance
costs, incurred in the normal operations of Tourism Victoria.
These items are recognised as an expense in the reporting
period in which they are incurred.
i) Assets
All non current assets controlled by Tourism Victoria are
reported in the balance sheet.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash
at bank, deposits at call and highly liquid investments with
an original maturity of 3 months or less, which are readily
convertible to known amounts of cash and are subject to
insignificant risk of changes in value.
Receivables
Receivables consist predominantly of debtors in relation to
goods and services, accrued investment income and GST
input tax credits recoverable.
All debtors are recognised at the amounts receivable as
they are due for settlement at no more than 30 days from
the date of recognition. The collectability of debtors is
reviewed on an ongoing basis.
Receivables are recognised initially at fair value and
subsequently measured at amortised cost, using the
effective interest rate method, less any accumulated
impairment.
A provision for doubtful receivables is made when there
is objective evidence that the debts will not be collected.
Bad debts are written off when identified.
Other financial assets
Investments are recognised and derecognised on trade date
where purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the
timeframe established by the market concerned, and are
initially measured at fair value, net of transaction costs.
Interests in listed and unlisted securities other than
controlled entities are brought to account at the lower
of cost and recoverable amount.
Property, plant and equipment
Plant, equipment and building leasehold improvements
are measured at cost less accumulated depreciation
and impairment.
FINANCIAL REPORT 2007–2008
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