Department of Education

2.13
Assets
Assets are recognised in the Statement of Financial
Position where it is probable that the future economic
benefits will flow to the department and the asset has a
cost or a value that can be measured reliably.
a) Cash and deposits
Cash means notes, coins and deposits held at call with
a bank or financial institution, for the department and
schools, as well as funds held in the Special Deposits
and Trust Fund. Deposits are recognised at amortised
cost being their face value.
b) Receivables
Receivables are recognised at amortised cost, less
any impairment losses, however, due to the short
settlement period, receivables are not discounted back
to their present value.
c) Assets held for sale
Assets held for sale (or disposal groups compromising
assets and liabilities) that are expected to be recovered
primarily through sale rather than continuing use
are classified as held for sale. Immediately before
classification as held for sale, the assets (or components
of a disposal group) are remeasured in accordance with
the department’s accounting policies. Thereafter the
assets (or disposal group) are measured at the lower of
carrying amount and fair value less costs to sell.
d) Property, plant, equipment, infrastructure,
library book stock and heritage
(i) Valuation basis
Land, buildings, infrastructure, and heritage assets
and other long-lived assets are recorded at fair value
less accumulated depreciation. All other non-current
physical assets, including work in progress, are recorded
at historic cost less accumulated depreciation and
accumulated impairment losses.
In determining the fair value of land reference is made
to the best available market evidence of the price of the
same or similar asset, evidence is drawn from sale of
nearby land where available.
In determining the fair value of buildings and
infrastructure assets a determination is made whether
the asset is of a specialised nature or openly traded
in the market. The majority of the department’s
building and infrastructure assets are of a specialised
nature, i.e. school buildings. The fair value of the
department’s specialised buildings and infrastructure
is estimated by the sum of current market prices for
one or more transactions required to reproduce or
replace the assets with the modern equivalent, less
accumulated depreciation. As part of calculating an
asset’s depreciation a ‘utility’ factor has been applied
which factors in the current spare capacity. For nonspecialised
building and infrastructure assets the fair
value is derived from market evidence on a direct
comparison basis.
Heritage assets with an intrinsic value are valued with
reference to sales of identical or similar assets, evidenced
in an open and transparent market place. Assets for
which a buying price is readily accessible are valued at
this replacement cost.
All other non-current physical assets, including work in
progress, are recorded at historic cost less accumulated
depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to
the acquisition of the asset. The costs of self-constructed
assets includes the cost of materials and direct labour,
any other costs directly attributable to bringing the asset
to a working condition for its intended use, and the costs
of dismantling and removing the items and restoring the
site on which they are located. Purchased software that
is integral to the functionability of the related equipment
is capitalised as part of that equipment.
When parts of an item of property, plant and equipment
have different useful lives, they are accounted for as
separate items (major components) of property, plant
and equipment.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant
and equipment is recognised in the carrying amount of
the item if it is probable that future economic benefits
embodied within the part will flow to the department
and its costs can be measured reliably. The carrying
amount of the replaced part is derecognised. The costs
of day-to-day servicing of property, plant and equipment
are recognised in profit or loss as incurred.
(iii) Asset recognition threshold
The asset capitalisation threshold adopted by the
department is $150,000 for intangible assets and major
capital works, and $10,000 for all other assets. Assets
valued at less than these thresholds are charged to the
Statement of Comprehensive Income in the year of
purchase (other than where they form part of a group of
similar items which are material in total).
(iv) Revaluations
The department revalues applicable assets on a program
of five years. In accordance, with AASB 116 Property,
Plant and Equipment, in years between valuations, indices
supplied by qualified valuers are used to establish fair
value.
Assets are grouped on the basis of having a similar
nature or function in the operations of the department.
e) Other assets
The department recognises some other small assets
such as prepayments of expenditure and GST input tax
credits received.
Financial Statements – Notes
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