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

                                                                                          Financial Statements 2016




Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2016

Note 1. Summary of Significant Accounting Policies (continued)


each depreciable asset, less its estimated residual      (1.n)   Liabilities- Employee Benefits
value, progressively over its estimated useful life to
the Council. Management believe that the straight-       Liabilities are recognised for employee benefits such
line basis appropriately reflects the pattern of         as wages and salaries, annual leave and long service
consumption of all Council assets.                       leave in respect of services provided by the
                                                         employees up to the reporting date. Liabilities for
Assets are depreciated from the date of acquisition      employee benefits are assessed at each reporting
or, in respect of internally constructed assets, from    date. Where it is expected that the leave will be paid
the time an asset is completed and commissioned          in the next twelve months the liability is treated as a
ready for use.                                           current liability. Otherwise the liability is treated as
                                                         non-current.
Where assets have separately identifiable
components that are subject to regular replacement,      Annual leave
these components are assigned useful lives distinct
from the asset to which they relate. Any expenditure     A liability for annual leave is recognised. Amounts
that increases the originally assessed capacity or       expected to be settled within 12 months are
service potential of an asset is capitalised and the     calculated on current wage and salary levels and
new depreciable amount is depreciated over the           includes related employee on-costs. Amounts not
remaining useful life of the asset to the Council.       expected to be settled within 12 months are
                                                         calculated on projected future wage and salary levels
The depreciable amount of improvements to or on          and related employee on-costs, and are discounted to
leasehold land is allocated progressively over the       present values. This liability represents an accrued
estimated useful lives of the improvements to the        expense and is reported in Note 14 as a payable. As
Council or the unexpired period of the lease,            council does not have an unconditional right to defer
whichever is the shorter.                                this liability beyond 12 months annual leave is
                                                         classified as a current liability.
Depreciation methods, estimated useful lives and
residual values of property, plant and equipment         Long service leave
assets are reviewed at the end of each reporting
period and adjusted where necessary to reflect any       A liability for long service leave is measured as the
changes in the pattern of consumption, physical          present value of the estimated future cash outflows to
wear and tear,         technical  or commercial          be made in respect of services provided by
obsolescence, or management intentions. The              employees up to the reporting date. The value of the
condition assessments performed as part of the           liability is calculated using current pay rates and
annual valuation process for assets measured at          projected future increases in those rates and includes
depreciated current replacement cost are used to         related employee on-costs. The estimates are
estimate the useful lives of these assets at each        adjusted for the probability of the employee remaining
reporting date. Details of the range of estimated        in the Council's employment or other associated
useful lives for each class of asset are shown in        employment which would result in the Council being
Note 11.                                                 required to meet the liability. Adjustments are then
                                                         made to allow for the proportion of the benefit earned
(1.m) Payables                                           to date. and the result is discounted to present value.
                                                         The interest rates attaching to Commonwealth
Trade creditors are recognised upon receipt of the       Government guaranteed securities at the reporting
goods or services ordered and are measured at the        date are used to discount the estimated future cash
agreed purchase/contract price net of applicable         outflows to their present value.        This liability is
discounts other than contingent discounts. Amounts       reported in Note 16 as a provision.
owing are unsecured and are generally settled on 30
day terms.                                               Where employees have met the prerequisite length of
                                                         service and council does not have an unconditional
                                                         right to defer this liability beyond 12 months long
                                                         service leave is classified as a current liability.
                                                         Otherwise it is classified as non-current.


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