Annual Report 2011 Australian Grand Prix Corporation

Notes to and Forming Part of the Financial Statementsfor the Financial Year Ended 30 June 2011Impairment of financial assetsAt the end of each reporting period, the Corporation assesses whether there is objective evidencethat a financial asset or group of financial assets is impaired. Objective evidence includes financialdifficulties of the debtor, default payments, debts which are more than 60 days overdue, andchanges in debtor credit ratings. All financial instrument assets, except those measured at fair valuethrough profit and loss, are subject to annual review for impairment.Bad and doubtful debts for financial assets are assessed on a regular basis. Those bad debtsconsidered as written off by mutual consent are classified as a transaction expense. Bad debts notwritten off by mutual consent and the allowance for doubtful receivables are classified as ‘othereconomic flows’ in the net result.The amount of the allowance is the difference between the financial asset’s carrying amount andthe present value of the estimated future cash flows, discounted at the effective interest rate.In assessing impairment of statutory (non-contractual) financial assets, which are not financialinstruments, professional judgement is applied in assessing materiality using estimates, averagesand other computational methods in accordance with AASB 13 Impairment of Assets.(m) Non-financial AssetsInfrastructure, Plant and EquipmentItems of non-financial physical assets are measured initially at cost and subsequently revalued at fairvalue less depreciation and impairment.The fair value of infrastructure, plant and equipment is normally determined by reference to theasset’s depreciated replacement cost. For infrastructure, plant and equipment, existing depreciatedhistorical cost is generally a reasonable proxy for depreciated replacement cost because of theshort lives of the assets concerned.The cost of constructed non-financial physical assets includes the cost of all materials used inconstruction, direct labour on the project, and an appropriate proportion of variable and fixedoverheads.Where an asset is received for no or nominal consideration, the cost is the asset’s fair value at thedate of acquisition.For the accounting policy on impairment of non-financial physical assets, refer to impairment ofnon-financial assets under Note 1(j) Impairment of non-financial assets.Non-financial physical assets constructed by the CorporationThe cost of constructed non-financial physical assets includes the cost of all materials used inconstruction, direct labour on the project, and an appropriate proportion of variable and fixedoverheads.38Australian Grand Prix Corporation Annual Report 2011