Geraldton Port Authority - Parliament of Western Australia

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.9 Property, plant and equipment
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Notes to and forming part of the Financial
Statements for the year ended 30 June 2008
Property, plant and equipment purchased or constructed for port operations is recorded at the cost of acquisition less
accumulated depreciation and impairment losses. This includes incidental costs directly attributable to the acquisition.
Property, plant and equipment, excluding freehold land, are depreciated at rates based on the expected useful lives using the
straight line method. Depreciation on assets under construction commences when the assets are ready for use. Depreciation
is charged to the income statement.
The useful lives for various classes of property, plant and equipment are as follows:
Property Plant & Equipment Type Years
Breakwaters 40
Dredging 40
Berths, jetties and infrastructure 10-40
Buildings and improvements 10-50
Plant and equipment 3-30
Berths, jetties and infrastructure 2–8.33
Plant and equipment under lease
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
20–33.33
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount (note 1.10).
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the
Income Statement.
1.10 Impairment
The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate the carrying value
may not be recoverable.
If a trigger exists and where the carrying values exceed the estimated recoverable amount, the assets are written down to their
recoverable amount.
The recoverable amount of assets is the greater of fair value less costs to sell and value in use. As the Authority is a not-forprofi
t entity, the value in use is the asset’s depreciated replacement cost.
Impairment losses are recognised in the income statement.
1.11 Leased assets
Leases are classifi ed as either operating or fi nance leases based on the economic substance of the agreement so as to refl ect
the risks and benefi ts incidental to ownership.
Finance leases
Leases which effectively transfer substantially all of the risks and benefi ts incidental to ownership of the leased asset to the
Authority are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of
the minimum lease payments and disclosed as property, plant and equipment under lease. A lease liability of equal value is
also recognised.
Finance leased assets are amortised over the shorter of the estimated useful life of the assets and the lease term. Minimum
lease payments are allocated between interest expense and reduction of the lease liability so as to achieve a consistent rate
of interest on the remaining balance of the liability with interest expense calculated using the interest rate implicit in the lease
and recognised directly against income.