ARTA Annual Report 2009 - Auckland Transport

If a hedging instrument expires or is sold, terminated, exercised or revoked, or it no longer meets the criteria
for hedge accounting, the cumulative gain or loss on the hedging instrument that remains recognised
directly in equity from the period when the hedge was effective will remain separately recognised in equity
until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, any
related cumulative gain or loss on the hedging instrument that remains recognised directly in equity from
the period when the hedge was effective will be recognised in the income statement.
Trade and other receivables
Trade and other receivables are initially measured at fair value and subsequently measured at amortised
cost using the effective interest method, less any provision for impairment.
Trade receivables are due for settlement not more than 30 days from the date of recognition.
A provision for the impairment of receivables is established when there is objective evidence that ARTA will
not be able to collect all amounts due according to the original terms of receivables. The amount of the
provision is the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted using the effective interest method. Debts which are known to be uncollectible are
written off during the period in which they are identified.
Inventories
Inventories such as spare parts, stores and finished goods are stated at the lower of cost and net realisable
value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed
overhead expenditure, the latter being allocated on the basis of normal operating capacity.
Costs are assigned to individual items of inventory on the basis of weighted average cost.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion (if applicable) and the estimated costs necessary to make the sale.
Property, Plant and Equipment
Property, plant and equipment consists of operational assets including land and improvements, rolling
stock, wharves, buildings, plant and equipment, and fixtures and fittings.
Property, plant and equipment is valued at cost, less accumulated depreciation and impairment losses.
(a)
Additions and subsequent costs
The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable
that future economic benefits or service potential associated with the item will flow to ARTA and the cost
of the item can be measured reliably.
87