2010-11 Annual Report - Taranaki District Health Board

page 53
Notes to the Financial Statements
For the Year Ended 30 June 2011
(h) Inventories
Inventories are valued at the lower of cost, determined at weighted average value, and net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
(i)
Non-current Assets held for sale
Non-current assets held for sale are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction, not through continuing use. Non-current assets held for sale are measured at the lower of their carrying amount and fair
value less costs to sell. They are not depreciated or amortised. For an asset or disposal group to be classified as held for sale, it must
be available for immediate sale in its present condition and its sale must be highly probable.
Any impairment losses for write-downs of non-current assets held for sale are recognised in the income statement.
Any increases in fair value (less costs to sell) are recognised up to the level of any impairment losses that have been previously
recognised.
(j)
Investments and Other Financial Assets
Financial assets are initially measured at fair value plus transaction costs unless they are carried at fair value through profit or loss in
which case the transaction costs are recognised in the income statement.
Purchases and sales of investments are recognised on trade-date, the date on which Taranaki District Health Board commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have
expired, or have been transferred and Taranaki District Health Board has transferred substantially all the risks and rewards of
ownership.
The fair value of financial instruments traded in active markets is based on quoted market prices at balance date. The fair value
of financial instruments that are not traded in an active market is determined using valuation techniques. Such techniques include:
using arm's length market transactions; reference to the current market value of another instrument that is substantially the same;
discounted cash flow analysis and option pricing models.
Taranaki District Health Board classifies its financial assets into the following category. Management determines the classification of
its investments at initial recognition and re-evaluates this designation at every reporting date.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or
loss when the loans and receivables are derecognised or impaired.
(k) Property, Plant and Equipment
Owned assets
Except for land and buildings, items of property, plant and equipment is stated at historical cost less any accumulated depreciation
and any accumulated impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour, the initial
estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an
appropriate proportion of direct overheads.
Leased assets
Leases where Taranaki District Health Board assumes substantially all of the risks and benefits incident to ownership of the leased
item, are capitalised at the lower of the fair value of the leased asset at the inception of the lease, or the present value of the
minimum lease payments.