Challenger TAFE | Annual Report 2006 - Parliament of Western ...

Challenger TAFE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
Challenger TAFE | Annual Report 2006 91
Subsequent measurement
After recognition as an asset, the revaluation model is used for the measurement of land and buildings and the cost model for all
other property, plant and equipment. Land and buildings are carried at fair value less accumulated depreciation on buildings and
accumulated impairment losses. All other items of property, vehicles, plant and equipment are stated at fair value with the exception
of Works of Art which are shown at historical cost.
Where market-based evidence is available, the fair value of land and buildings is determined on the basis of current market
buying values determined by reference to recent market transactions. When buildings are revalued by reference to recent market
transaction, the accumulated depreciation is eliminated against the gross carrying amount of the asset and the net amount restated
to the revalued amount.
Where market-based evidence is not available, the fair value of land and buildings is determined on the basis of existing use. This
normally applies where buildings are specialised or where land use is restricted. Fair value for existing use assets is determined by
reference to the cost of replacing the remaining future economic benefi ts embodied in the asset, ie. the depreciated replacement
cost. Where the fair value of buildings is dependent on using the depreciated replacement cost, the gross carrying amount and the
accumulated depreciation are restated proportionately.
Independent valuation of land and buildings are performed independently on an annual basis by the Department of Land
Information (Valuation Services). With suffi cient regularity to ensure that the carrying amount does not differ materially from the
asset’s fair value at the balance sheet date.
The most signifi cant assumptions in estimating fair value are made in assessing whether to apply the existing use basis to assets.
Professional judgement by the valuer is required where the evidence does not provide a clear distinction between market type assets
and existing use assets.
Refer to note 26 ‘Property, plant and equipment’ for further information on revaluations.
Depreciation
All non-current assets having a limited useful life are systematically depreciated over their estimated useful lives in a manner that
refl ects the consumption of their future economic benefi ts.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method, using rates which are reviewed
annually. Estimated useful lives for each class of depreciable asset are:
Buildings 40 to 95 years
Leasehold Improvements 4 to 13 years
Motor Vehicles, Caravans and Trailers 5 to 23 years
Plant, Furniture and General Equipment 4 to 28 years
Computing, Communications and Software 1 to 15 years
Marine Craft 8 to 19 years
Works of art controlled by the College are classifi ed as plant, property and equipment which is anticipated to have a very long and
indefi nite useful lives. Their service potential has not, in any material sense, been consumed during the reporting period and so no
depreciation has been recognised.
(h) Intangible Assets
Capitalisation/Expensing of assets
Acquisition of intangible assets costing over $5,000 and internally generated intangible assets costing over $50,000 are capitalised.
The cost of utilising the assets is expensed (amortised) over their useful life. Costs incurred below these thresholds are immediately
expensed directly to the Income Statement.
All acquired and internally developed intangible assets are initially recognised at cost. For assets acquired at no cost or for nominal
consideration, the cost is their fair value at the date of acquisition.
The cost model is applied for subsequent measurement requiring the asset to be carried at cost less any accumulated amortisation
and accumulated impairment losses