Royal Botanic Gardens Victoria Annual Report 2018-19

7. RISKS, CONTINGENCIES AND VALUATION JUDGEMENTS
Specialised land and buildings
The market approach is also used for specialised land, although it is adjusted for the community service obligation (CSO) to reflect the
specialised nature of the land being valued.
The CSO adjustment is a reflection of the valuer’s assessment of the impact of restrictions associated with an asset to the extent that is
also equally applicable to market participants. This approach is in light of the highest and best use consideration required for fair value
measurement, and takes into account the use of the asset that is physically possible, legally permissible, and financially feasible. As
adjustments of CSO are considered as significant unobservable inputs, specialised land is classified as a Level 3 asset.
For the majority of the Board’s specialised buildings, the current replacement cost method is used, adjusting for the associated
depreciations. As depreciation adjustments are considered significant unobservable inputs in nature, specialised buildings are classified
as Level 3 fair value measurements.
An independent valuation of the Board’s specialised buildings was performed by the Valuer-General Victoria. The valuation was performed
using the market approach adjusted for CSO. The effective date of the valuation was 30 June 2016. In accordance with the requirements
of FRD 103F Non-financial physical assets, a managerial revaluation was performed on the carrying amount of the Board's land based on
the land indices issued by the Valuer-General to reflect the increase in fair value at 30 June 2018.
Specialised cultural assets
Specialised cultural assets, including the State Botanical Collection, are valued using replacement cost method. Replacement costs are
costs to replace the current service capacity of the asset. The method used calculates a unit cost per sample unit that is then scaled up to
each collection.
An independent valuation of the Board’s specialised cultural assets was performed by the Valuer-General Victoria. The valuation was
performed using the replacement cost approach. The effective date of the valuation was 30 June 2016.
Infrastructure assets
Infrastructure assets are valued using the current replacement cost method. This cost represents the replacement cost of the
building/component after applying depreciation rates on a useful life basis. Replacement costs are costs to replace the current service
capacity of the asset.
Where it has not been possible to examine hidden works such as structural frames and floors, the use of reasonable materials and
methods of construction have been assumed, bearing in mind the age and nature of the building. The estimated cost of reconstruction,
including structural services and finishes, also factors in any heritage classifications as applicable.
An independent valuation of the Board's infrastructure assets was performed by the Valuer-General Victoria. The valuation was performed
based on the current replacement cost of the assets. The effective date of the valuation was 30 June 2016.
Vehicles
Vehicles are valued using the current replacement cost method. The Board acquires new vehicles and at times disposes of them before
the end of their economic life. The process of acquisition, use and disposal in the market is managed under finance leasing arrangements
with DTF and Westpac Bank. Depreciation rates used reflect the utilisation of the vehicles.
Plant and equipment
Plant and equipment is held at fair value. When plant and equipment is specialised in use, such that it is rarely sold other than as part of a
going concern, fair value is determined using the current replacement cost method.
There were no changes in valuation techniques throughout the period to 30 June 2019.
For all assets measured at fair value, the current use is considered the highest and best use.
The reconciliation of Level 3 fair value is as follows:
Specialised Buildings Vehicles Plant and Infrastructure
2019 land equipment
$ $ $ $ $
Opening balance 310,676,607 32,296,026 752,515 2,249,490 62,303,839
Purchases/(sales) - 614,554 257,043 729,511 382,666
Specialised
Cultural
$
242,062,900
-
Gains or losses recognised in net result:
Impairments - - - - -
Depreciation - (561,059) (133,090) (393,049) (1,353,123)
-
-
Gains or losses recognised in other economic flows - other comprehensive income:
Revaluations - - - - -
Closing balance 310,676,607 32,349,521 876,468 2,585,952 61,333,382
-
242,062,900
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Royal Botanic Gardens Board Victoria 2018-19 Financial Report Page 29