annual report/2006 - University of Melbourne

Notes to and forming part of the Financial Statements
These rates have been consistently maintained and there has been no change from rates applied in prior years.
Depreciation rates used by some subsidiaries vary slightly from the rates stated above.
Acquisitions are depreciated from the date of purchase; disposals are depreciated up to the date of sale or when classified
as held-for-sale (refer to note 1.14).
1.11 Intangible Assets
(i)
Research
Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge and
understanding, is recognised in the Income Statement as an expense when it is incurred.
(ii) Goodwill
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the
acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
(iii) Software
Major computer software is recorded in the Balance Sheet at cost less amortisation and where applicable, any impairment
losses. Only the cost of the software is capitalised, installation costs are expensed in the Income Statement in the year
they are incurred. Amortisation is provided on a straight line basis at the rate of 33 1/3%. There has been no change in the
amortisation rate from the prior year.
1.12 Revaluation of Non Current Assets
Accounting Standard AASB 116 Property, Plant and Equipment requires reporting entities to measure assets within each class
of non-current asset on either the cost basis or on a fair value basis. Subsequent to initial recognition, non-current physical
assets, other than plant, equipment, vehicles, the library collection and intangible assets, are measured at fair value. Plant,
equipment and vehicles are measured at cost.
In accordance with the not-for-profit requirements of AASB 116, revaluation increments are credited directly to the asset
revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of
asset previously recognised as an expense in the net result, the increment is recognised as revenue in the net result.
Revaluation decrements are recognised immediately as expenses in the net result, except that, to the extent that a credit
balance exists in the asset revaluation reserve in respect of the same class of assets, they are debited directly to the asset
revaluation reserve.
Revaluation increments and decrements relating to individual assets within a class of property, plant and equipment are offset
against one another within that class but are not offset in respect of assets in different classes. Revaluation reserves are not
transferred to retained earnings on derecognition of the relevant asset.
1.13 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 an 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.
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The University of Melbourne Annual Report 2006