annual report 2012 – 13 - Australian Government Solicitor

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013same asset that was previously recognised throughoperating result. Revaluation decrements for each assetare recognised directly through operating result exceptto the extent that they reverse a previous revaluationincrement for that asset.Any accumulated depreciation as at the revaluationdate for Library and Infrastructure, plant and equipmentassets are eliminated against the gross carrying amountand the asset restated to the revalued amount.Any accumulated depreciation as at the revaluation datefor Leasehold assets is restated proportionately withthe change in the gross carrying amount of the asset sothat the carrying amount of the asset after revaluationequals its revalued amount.DepreciationDepreciable infrastructure, plant and equipment assetsare written-off to their estimated residual values overtheir estimated useful lives to AGS using, in all cases,the straight line method of depreciation. Leaseholdimprovements are depreciated on a straight-line basisover the lesser of the estimated useful life of theimprovements or the unexpired period of the lease.Depreciation rates (useful lives), residual values andmethods are reviewed at each reporting date andnecessary adjustments are recognised in the current, orcurrent and future reporting periods, as appropriate.Depreciation rates applying to each class of depreciableasset are based on the following useful lives:2012–13 2011–12Library 7–10 years 7–10 yearsLeasehold improvements lease term lease termOther infrastructure, plantand equipment– Computer equipment 3–7 years 3–7 years– Other plant and equipment 5–10 years 5–10 yearsThe aggregate amount of depreciation allocated foreach class of asset during the reporting period isdisclosed in Note 6C.ImpairmentAll assets were assessed for impairment at 30 June2013. Where indications of impairment exist, the asset’srecoverable amount is estimated and an impairmentadjustment made if the asset’s recoverable amount isless than its carrying amount.The recoverable amount of an asset is the higher of itsfair value less costs to sell and its value-in-use. Valuein use is the present value of the future cash flowsexpected to be derived from the asset. Where the futureeconomic benefit of an asset is not primarily dependenton the asset’s ability to generate future cash flows, andthe asset would be replaced if AGS were deprived ofthe asset, its value in use is taken to be its depreciatedreplacement cost.No indicators of impairment were found for assets at fairvalue.DerecognitionAn item of property, plant and equipment is derecognisedupon disposal or when no further future economicbenefits are expected from its use or disposal.1.17 IntangiblesAGS intangibles comprise internally developed softwarefor internal use and purchased software. These assets arecarried at cost.Software is amortised on a straight-line basis over theiranticipated useful lives. The useful lives of AGS’s softwareare 3 to 7 years (2011-12: 3 to 7 years).All software assets were assessed for indicationsof impairment as at 30 June 2013. No indicators ofimpairment were found.1.18 Taxation / Competitive NeutralityAGS is exempt from all State and Territory taxation. It isliable for Income Tax, Fringe Benefit Tax and for Goods andServices Tax (GST).Revenues, expenses and assets are recognised net of GSTexcept:• where the amount of GST incurred is not recoverablefrom the Australian Taxation Office• for receivables and payables.Competitive NeutralitySo that AGS does not have a competitive advantage overprivate sector legal practices these financial statementsinclude charges representing the full value of theseitems shown under the categories to which they relate.Amounts identified as competitive neutrality expenses arepaid to Consolidated Revenue each year and are recordedin the Financial Statements as a liability to the extent thatthey are unpaid at 30 June 2013.1.19 InsuranceAGS is aware of the potential for losses arising from itsnormal operations as a legal practice and has taken outinsurance arrangements designed to ensure that the riskof adverse effect on the profits, assets and cash flow isimmaterial to the continuing operations of AGS. Workerscompensation is insured through Comcare Australia.1.20 Income taxCurrent tax assets and liabilities for the current and priorperiods are measured at the amount expected to berecovered from or paid to the taxation authorities, basedon the current period’s taxable income. The tax rates andtax laws used to compute the amount are those that areenacted or substantively enacted by the reporting date.Deferred income tax is provided on all temporarydifferences at the reporting date between the tax basesof assets and liabilities and their carrying amounts forfinancial reporting purposes.AGS Annual report 2012–13 69