2007 Annual report (PDF 8.1 Mb) - University of Melbourne

FINANCIAL
STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1.14 Impairment of Assets
At each reporting date, all assets except for those held at fair value including, inventories, assets arising from employee benefits and
financial instrument assets are assessed to determine whether there is any indication of impairment. If there is an indication of impairment,
the assets concerned are tested as to whether their carrying amount exceeds the recoverable amount, the difference is written-off by a
charge to the Income Statement except to the extent that the write-down can be debited to an asset revaluation reserve applicable to that
class of asset.
At each reporting date, assets previously determined to be impaired are assessed for circumstances indicating that an impairment loss
recognised in prior periods no longer exists or may have decreased. If there is an indication that the impairment loss has been reversed, the
assets concerned are tested as to whether the recoverable amount exceeds the carrying amount. The difference not exceeding the original
impairment is credited to the Income Statement, except for revalued assets, which are credited to an asset revaluation reserve.
Impairment testing is performed annually for goodwill. Impairment losses are taken to the Income Statement and cannot be reversed.
Where it is not possible to estimate the recoverable amount of an individual asset, the University estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
1.15 Non-Current Assets (or Disposal Groups) Held for Sale and Discontinued Operations
In the event that the Group identified a non-current asset (or disposal group) to be classified as held for sale, the asset (or disposal group)
would be stated at the lower of the carrying amount and fair value less costs to sell, if the carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and
the asset (or disposal group) is available for immediate sale in its present condition.
An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less costs to sell.
A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset
(or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for
sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from
the other assets in the Balance Sheet. The liabilities of a disposal group classified as held for sale are presented separately from other
liabilities in the Balance Sheet.
In June 2005, the University Council decided that it would cease the delivery of Vocational Education and Training (VET) programs. This
involves the progressive withdrawal from the delivery of agriculture-related education on the campuses at Gilbert Chandler, Longerenong,
Glenormiston and McMillan. The closure of these campus operations does not meet the definition of a discontinued operation under
AASB 5 Non-current Assets Held for Sale and Discontinued Operations as the campuses are not considered to be a separate major line of
business of the University. Land and Buildings associated with the campuses were impaired as it is likely that they will be returned to the
State Government free of charge. In 2007, the University terminated the lease with the Department of Primary Industries for the Gilbert
Chandler campus. The impairment on the Gilbert Chandler buildings was subsequently reversed.
On 2 January 2008, UMEE Ltd sold its English language centre business in Melbourne, Hawthorn-Melbourne, and its rights under the
franchise agreement with Hawthorn-Muscat to Hawthorn Learning Pty Ltd. In addition, the company entered into an agreement on
17 January 2008 to terminate the Hawthorn-Singapore franchise agreement effective 31 December 2007. Consequently, effective 2
January 2008, UMEE Ltd ceased to operate any English language teaching activities. Assets and Liabilities associated with the franchise
agreement are disclosed on the face of the Balance Sheet as Assets Classified as Held-for-Sale and Liabilities Associated with Assets
Classified as Held-for-Sale.
1.16 Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year, which are unpaid. The
amounts are unsecured and are usually paid within 30 days commencing from the month following recognition.
1.17 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Income Statement
over the period of the borrowings using the effective interest method.
Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
twelve months after the balance sheet date.
1.18 Borrowing costs
Borrowing costs including those incurred for the construction of any qualifying asset are expensed during the period of time that is required
to complete and prepare the asset for its intended use or sale.
1.19 Employee Benefits
Provision is made for the liability for employee benefits arising from services rendered by employees at the reporting date. Employee
benefits which are short term in nature and are expected to be settled within one year have been measured at the amounts expected to
be paid when the liability is settled, plus related on costs. Employee benefits payable later than one year and which are long term in nature
have been measured at the present value of the estimated future cash outflows to be made for those benefits.
The University of Melbourne Annual Report 2007 105