Annual Report 2014

NOOSA SHIRE COUNCIL

Notes to the Financial Statements
For the six months ending 30 June 2014

   1,37        Investment in associate
                    As at 1 July 2010 a water distribution and retail business called Unitywater was established in
                    accordance with the South-East Queensland Water (Distribution and Retail Restructuring) Act 2009
                    to deliver water and waste water services to customers within the local government areas of Moreton
                    Bay Regional Council, Sunshine Coast Regional Council and the now de-amalgamated Noosa Shire
                    Council.
                    Under the Act, governannce arrangements for Unitywater were established in a Participation
                    Agreement which commenced from | July 2010. The agreement provides for participation rights to be
                    held by the participating Councils. The participating Councils are Noosa Council, Moreton Bay
                    Regional Council and the Sunshine Coast Regional Council. The Participation Rights electively
                    represent an investment in an associate by Noosa Shire Council and are disclosed in Note 17.

                    Associates are entities over which Noosa Shire Council exerts significant influence, Significant
                    influcnce is the power to particpate in the financial and operating policy decisions but is not control or
                    joint control. Council] has determined that Unitywater is an associate for accounting disclosure
                    purposes,
                    Investments in associates are accounted for in ihe financial statements using the equity method and are
                    carried the lower of cost and recoverable amount. Under this method, the entity's share of post
                    acquisition profits or losses of associates is recognised in the Statement of Comprehensive Income and
                    the interest in the equity of the associate is recognised in the Statement of Financial Position. The
                    cumulative post-acquisition movements, being the share of profits less dividends received and accrued,
                    ate adjusted against the cost of the investment.

   1,18        Property, plant and equipment
                     Each elass of property, plant and equipment is carried at cost or fair value less, where applicable, any
                    accumulated depreciation and accumulated impairment losses. Items of properly, plant and equipment
                    with a total value of less than $5,000, except for land and network assets (which have a recognition
                     threshold of $3), are treated as an expense in the year of acquisition. Alf other items of property, plant
                     and equipment are capitalised.
                     The classes of property plant and equipment recognised by the council are reported in note 18 (b).

          {a)        Acquisition of assets
                     Acquisitions of assets are initially recorded ai cost. Cost is determined as the fair value of the assets
                     given as consideration plus costs incidental to the acquisition, including freight in, architect's fees and
                     engineering design fecs and all other establishment costs.
                     Property, plant and equipment received in the form of contributions, arc recognised as assets and
                     revenues at fair value by Council valuation where that value cxcceds the recognition thresholds for the
                     respective asset class. Fair value is the price that would be received to sell the asset in an orderly
                     transaction between market participants at the measurement date. Assets transferred from Sunshine
                     Coast Regional Council (SCRC) have been initially recognised at their fair value in the SCRC books
                     immediately before the transfer. These were subsequently revalued in accordance with Note 1.18 (c) .

         (b)         Capital and operating expenditure
                     Wage and materials expenditure incurred for the acquisition or construction of assets are treated as
                     capital expenditure. Routine operating maintenance, repair costs and minor renewals to maintain the
                     operational capacity of the non-current asset is expensed as incurred, while expenditure that relates to
                     replacement of a major component of an asset to maintain its service potential is capitalised.

          (c)        Valuation
                     Land, buildings, infrastructure and heritage and cultural assets are measured on the revaluation basis, at
                     fair value, in accordance with AASBI16 Property, Plant and Equipment and AASB 13 Fair Value
                     Measurement . The fair values mean the price that would be received to sell an asset or paid to transfer
                     a liability in an orderly transaction between market participants at the measurement date.

                     Non-current physical assets measured at fair value are revalued, where required, so that the carrying
                     amount of each class of asset does not materially differ from its fair value at the reporting date. This is
                     achieved by engaging independent, professionally qualified valuers to determine the fair value for each
                     class of property, plant and equipment assets at least once every 3 years. This process involves the
                     valuer physically sighting a representative sample of Council assets across all asset classes and making
                     their own assessments of the condition of the assets at the date of inspection.

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