2011-2012 Annual Report - Full Version - PDF - Palmerston North ...

Financial Statements Note 1AdditionsThe cost of an item of property, plant and equipment isrecognised as an asset if, and only if, it is probable thatfuture economic benefits or service potential associatedwith the item will flow to PNCC and the cost of the item canbe measured reliably.In most instances, an item of property, plant and equipmentis recognised at its cost. Where an asset is acquired at nocost, or for a nominal cost, it is recognised at fair value as atthe date of acquisition.DisposalsGains and losses on disposals are determined by comparingthe proceeds with the carrying amount of the asset. Gainsand losses on disposals are reported net in the surplusor deficit. When revalued assets are sold, the amountsincluded in asset revaluation reserves in respect of thoseassets are transferred to retained earnings.Subsequent costsCosts incurred subsequent to initial acquisition arecapitalised only when it is probable that future economicbenefits or service potential associated with the item willflow to PNCC and the cost of the item can be measuredreliably.DepreciationDepreciation is provided on a straight-line basis on allproperty, plant and equipment (except as referred to in thefollowing paragraph), at rates that will write off the cost (orvaluation) of the assets to their estimated residual valuesover their useful lives.Land, land under roads, restricted assets, assets underconstruction, investment properties, biological assets,and the museum, art gallery and heritage assets are notdepreciated.The heritage and art collection assets of Te ManawaMuseums Trust have not been depreciated, as it is theTrust’s Policy to maintain the collections in its currentstate, in accordance with the Trust’s Conservation Policy.Donated objects are recorded at fair value, or depreciatedreplacement cost, or nil value if considered unrealisableor irreplaceable. There is a portion of the heritage and artcollection that is not formally owned by the Te ManawaMuseums Trust. These assets are held and maintained bythe Trust by agreement with the owners.The useful lives and associated depreciation rates of majorclasses of assets have been estimated as follows:OPERATING ASSETSYearsBuildings 50-100Building fit-out 10-50Plant and equipment 4-25Furniture and fittings 4-25Motor vehicles 3-18Computer equipment 2-7Library books 3-10Exhibitions 1-5Leasehold improvements 1-30INFRASTRUCTURAL ASSETSRoadingBridges and culverts 25-125Sub base and base course 100Surfaces 1-20Footpaths 15-99Kerb and channel 80Signage 20Signals, streetlights 5-80Trees 100Vehicle crossing 80CarparksCarpark buildings 50Sub base and base course 100Surfaces 20-40Waste ManagementBuildings 50-100Safety fence, portable screens 40Pumps 30Sumps, drainage 100Machinery 15-35Wheelie bins 15StormwaterPipework 120-175Sumps 150Laterals, manholes 120-150Pumping station/pumps 10-100WastewaterPipeworks, laterals, manholes 120Pumps 15-30Pumping stations 30-100Buildings 50-100Treatment plants 15-120WaterPipeworks, laterals 50-120Hydrants 80Tobies 55-70Valves 80Water meters 15-25Pumping stations 15-100Dams 15-1000Reservoirs 100AirportRunway, taxiways, and aprons 2-99The residual value and useful life of an asset is reviewed,and adjusted if applicable, at each financial year end.Intangible assetsGoodwillGoodwill represents the excess of the cost of an acquisitionover the fair value of PNCC‘s share of the identifiableassets, liabilities and contingent liabilities of the acquiredsubsidiary/associate at the date of acquisition. Goodwill onacquisition of subsidiaries is included in “Intangible Assets”.Separately recognised goodwill is tested for impairmentannually and carried at cost less accumulated impairmentlosses. An impairment loss recognised for goodwill is notreversed in any subsequent period.Goodwill is allocated to cash generating units for thepurposes of impairment testing. The allocation is made tothose cash generating units or groups of cash generatingunits that are expected to benefit from the businesscombination in which the goodwill arose.Software acquisition and developmentAcquired computer software licenses are capitalised on thebasis of the costs incurred to acquire and bring to use thespecific software.Costs that are directly associated with the developmentof software for internal use by PNCC are recognised asan intangible asset. Direct costs include the softwaredevelopment employee costs and an appropriate portionof relevant overheads.Costs associated with maintaining computer software andstaff training costs are recognised as an expense whenincurred.Other intangible assetsCosts incurred are capitalised on assets constructed onthird party land, such as an athletic track, which have longterm access available to residents.142Palmerston North City Council Annual Report 2011/12