2016-11-08 S&O Agenda - Item 3, Attachment 1 - Local Economic Plan

                                                                                           Financial Statements 2016


                                                                                                          QAO
Noosa Shire Council

 Notes to the Financial Statements
 for the year e nded 30 June 201 6

Note 1. Summary of Significant Accounting Policies (continued)

assets (which have a recognition threshold of $1),        Non·current physical assets measured at fair value
are treated as an expense in the year of acquisition.     are revalued. where required, so that the carrying
All other items of property, plant and equipment are      amount of each class of asset does not materially
capitalised.                                              differ from its fair value at the reporting date. This is
                                                          achi~ved by engaging independent, professionally
The classes of property, plant and equipment              qualified valuers to determine the fair value for each
recognised by Council are reported in note 11 .           class of property, plant and equipment assets at least
                                                          once every 3 years. Th is process involves the valuer
Acquisition of assets                                     physically sighting a representative sample of Council
                                                          assets across all asset classes and making their own
Acquisitions of assets are initially recorded at cost.    assessments of the condition of the assets at the date
Cost is determined as the fair value of the assets        of inspection.
given as consideration plus costs incidental to the
acquisition, including freight in. architect's fees and    Council uses internal engineers to assess the
engineering design fees and all other establishment        condition and cost assumptions associated with all
costs.                                                     infrastructure assets , the results of which are
                                                           considered in combination with the relevant indices
Property, plant and equipment received in the form         independently published for the Sunshine Coast
of contributions, are recognised as assets and            Region. Together these are used to form the basis of
revenues at fair value by Council valuation where         a management valuation for infrastructure asset
that value exceeds the recognition thresholds for the     classes in each of the intervening years. With respect
respective asset class. Fair value is the price that      to the valuation of the land and improvements, and
would be received to sell the asset in an orderly         buildings classes in the intervening years,
transaction between market participants at the            management engage independent. professionally
measurement date.                                         qualified valuers to perform a "desktop" valuation. A
                                                          desktop valuation involves management providing
Capital and operating expenditure                         updated information to the valuer regarding additions,
                                                          deletions and changes in assumptions such as useful
Direct labour and materials and an appropriate            life, residual value and condition rating. The valuer
proportion of overheads incurred in the acquisition or    then determines suitable indices which are applied to
construction of assets are treated as capital             each of these asset classes.
expenditure. Assets under construction are not
depreciated until they are completed and                  On revaluation, accumulated depreciation is restated
commissioned , at which time they are reclassified        proportionately with the change in the carrying
from work in progress to the appropriate property,        amount of the asset and any change in the estimate
plant and equipment class.                                of remaining useful life.

Routine operating maintenance. repair costs and           Separately identified components of assets are
minor renewals to maintain the operational capacity       measured on the same basis as the assets to which
and useful life of the non-current asset is expensed      they relate.
as incurred, while expenditure that relates to
replacement of a major component of an asset to           Capital work in progress
maintain its service potential is capitalised.
                                                          The cost of property, plant and equipment being
Valuation                                                 constructed by the Council includes the cost of
                                                          purchased services, materials, direct labour and an
Land and improvements, butldtngs, major plant and         appropriate proportion of labour overheads.
all infrastructure assets are measured on the
revaluation basis, at fair value, in accordance with      Depreciation
AASB 116 Property, Plant & Equipment and AASB
13 Fair Value requirements. Other plant and               Land is not depreciated as it has an unlimited useful
equipment and work in progress are measured at            life. Depreciation on other property, plant and
cost.                                                     equipment assets is calculated on a straight-line basis
                                                          so as to write-off the net cost or revalued amount of

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