DRAFT LTP book.indb - Hurunui District Council

Draft Hurunui Community Long Term Plan 2012 - 2022Measurement BaseThe prospective fi nancial statements have been prepared onthe historical cost basis, modifi ed by the revaluation of certainassets.Functional and Presentation CurrencyThe fi nancial statements are presented in New Zealand dollarsand all values are rounded to the nearest thousand dollars($’000). The functional currency of the HDC is New Zealanddollars.Changes in Accounting PoliciesThe accounting policies set out below have been appliedconsistently to all periods presented in these fi nancial statements.Signifi cant Accounting PoliciesBasis of ConsolidationThe purchase method is used to prepare the consolidatedfi nancial statements, which involves adding together like itemsof assets, liabilities, equity, income and expenses on a line-by-linebasis. All signifi cant intragroup balances, transactions, incomeand expenses are eliminated on consolidation.SubsidiariesHDC consolidates as subsidiaries in the group fi nancialstatements all entities where HDC has the capacity to controltheir fi nancing and operating policies so as to obtain benefi tsfrom the activities of the entity. This power exists where HDCcontrols the majority voting power on the governing body orwhere such policies have been irreversibly predetermined byHDC or where the determination of such policies is unable tomaterially impact the level of potential ownership benefi ts thatarise from the activities of the subsidiary.HDC measures the cost of a business combination as theaggregate of the fair values, at the date of exchange, of assetsgiven, liabilities incurred or assumed, in exchange for control ofthe subsidiary plus any costs directly attributable to the businesscombination.Any excess of the cost of the business combination overHDC’s interest in the net fair value of the identifi able assets,liabilities and contingent liabilities is recognised as goodwill. IfHDC’s interest in the net fair value of the identifi able assets,liabilities and contingent liabilities recognised exceeds the costof the business combination, the difference will be recognisedimmediately in the statement of comprehensive income.Investments in subsidiaries are valued as available for saleinvestments in HDC’s own “parent entity” fi nancial statements.AssociatesHDC accounts for an investment in an associate in the groupfi nancial statements using the equity method. An associate is anentity over which the HDC has signifi cant infl uence and thatis neither a subsidiary nor an interest in a joint venture. Theinvestment in an associate is initially recognised at cost and thecarrying amount is increased or decreased to recognise HDC’sshare of the surplus or defi cit of the associate after the dateof acquisition. HDC’s share of the surplus or defi cit of theassociate is recognised in HDC’s statement of comprehensiveincome. Distributions received from an associate reduce thecarrying amount of the investment.If HDC’s share of an associate’s defi cit equals or exceeds itsinterest in the associate, HDC discontinues recognising its shareof further deficits. After HDC’s interest is reduced to zero,additional defi cits are provided for, and a liability is recognised,only to the extent that HDC has incurred legal or constructiveobligations or made payments on behalf of the associate. If theassociate subsequently reports surpluses, HDC will resumerecognising its share of those surpluses only after its share ofsurpluses equals the share of defi cits not recognised.HDC’s share in the associate’s surplus or defi cits resulting fromunrealised gains on transactions between the HDC and itsassociates is eliminated.HDC’s investments in associates are carried at cost in HDC’sown “parent entity” fi nancial statements.RevenueRevenue is measured at the fair value of consideration received.Rates RevenueRates are set annually by a resolution from Council andrelate to a fi nancial year. All ratepayers are invoiced within thefi nancial year to which the rates have been set. Rates revenue isrecognised when payable.Rates collected on behalf of the Canterbury Regional Council(ECan) are not recognised in the fi nancial statements as HDC isacting as an agent for ECan.Water RevenueWater Billing is recognised on volumes delivered on accrualbasis.New Zealand Transport Agency Roading SubsidiesNew Zealand Transport Agency roading subsidies are recognisedas revenue upon entitlement which is when conditions pertainingto eligible expenditure have been fulfi lled.157