DRAFT LTP book.indb - Hurunui District Council

Draft Hurunui Community Long Term Plan 2012 - 2022Trade and Other ReceivablesTrade and other receivables are initially measured at fair valueand subsequently measured at amortised cost using the effectiveinterest rate method, less any provision for impairment.InventoriesInventories are stated at the lower of cost and net realisablevalue. Cost comprises direct materials and, where applicable,direct labour costs and those overheads that have beenincurred in bringing the inventories to their present locationand condition. Cost is calculated using the weighted averagemethod.Net realisable value represents the estimated selling price lessall estimated costs of completion and costs to be incurred inmarketing, selling and distribution.Financial AssetsThe Group classifi es its fi nancial assets into the following fourcategories: fi nancial assets at fair value through profi t or loss,held to maturity investments, loans and receivables and fi nancialassets at fair value through equity. The classifi cation dependson the purpose for which the investments were acquired.Management determines the classification of its investmentsat initial recognition and re-evaluates the designation everyreporting date.Financial assets and liabilities are initially measured at fair valueplus transaction costs unless they are carried at fair valuethrough profi t and loss in which case transaction costs arerecognised in the statement of comprehensive income.InvestmentsInvestments are recognised on a trade-date basis and areinitially measured at fair value, including transaction costs. Atsubsequent reporting dates, debt securities that the Group hasthe expressed intention and ability to hold to maturity (heldto-maturitydebt securities) are measured at amortised costusing the effective interest rate method, less any impairmentloss recognised to refl ect irrecoverable amounts.Investments other than held-to-maturity debt securities areclassifi ed as either held-for-trading or available-for sale, and aremeasured at subsequent reporting dates at fair value.Where securities are held for trading purposes, gains and lossesarising from changes in fair value are included in the statementof comprehensive income for the period.For available-for-sale investments, gains and losses arising fromchanges in fair value are recognised directly in equity, until thesecurity is disposed of or is determined to be impaired, at whichtime the cumulative gain or loss previously recognised in equityis included in the statement of comprehensive income for theperiod.Impairment of InvestmentsAn impairment loss is recognised in the statement ofcomprehensive income when there is objective evidencethat the asset is impaired, and is measured as the differencebetween the investment’s carrying amount and the presentvalue of estimated future cash fl ows discounted at the effectiveinterest rate computed at initial recognition. Impairment lossesare reversed in subsequent periods when an increase in theinvestment’s recoverable amount can be related objectively toan event occurring after the impairment was recognised, subjectto the restriction that the carrying amount of the investment atthe date the impairment is reversed shall not exceed what theamortised cost would have been had the impairment not beenrecognised.Derivative Fiancial InstrumentsThe Council uses derivative fi nancial instruments (primarilyinterest rate hedges) to hedge the risks associated with interestrate movements. The use of fi nancial derivatives is governedby the Council’s policies approved by the HDC and the HHLboard of directors, which provide written principles on theuse of fi nancial derivatives consistent with the Council’s riskmanagement strategy. The Group does not use derivativefi nancial instruments for speculative purposes.Such derivatives are initially recorded at fair value on contractdate and are adjusted to fair value at subsequent reporting dates.Changes in the fair value of derivative fi nancial instruments arerecognised in the statement of comprehensive income as theyarise.Non-Current Assets Held for SaleNon-current assets are classifi ed as held for sale if their carryingamount will be recovered principally through a sale transaction,not through continuing use. Non-current assets held for sale aremeasured at the lower of their carrying amount and fair valueless costs to sell.Any impairment losses for write downs or non-current assetsheld for sale are recognised in the statement of comprehensiveincome. Any increase in fair value (less costs to sell) arerecognised up to the level of any impairment losses that havebeen previously recognised.Non-current assets (including those that are part of a disposalgroup) are not depreciated or amortised while they are classifi edas held for sale. Interest and other expenses attributable to the159