Annual Report 2019-20

Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2020

Note 14. Property, Plant and Equipment (continued)

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 every three to five 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.
Council uses internal engineers to assess the condition and cost assumptions associated with all infrastructure
assets, the results of which are considered in combination with the relevant indices independently published for
the Sunshine Coast region. Together these are used to form the basis of a management valuation for
infrastructure asset classes in each of the intervening years. With respect to the valuation of the land and
improvements, and buildings classes in the intervening years, management engage independent, professionally
qualified valuers to perform a "desktop" valuation. A desktop valuation involves management providing updated
information to the valuer regarding additions, deletions and changes in assumptions such as useful life, residual
value and condition rating. The valuer then determines suitable indices which are applied to each of these asset
classes
Capital work in progress

The cost of property, plant and equipment being constructed by the Council includes the cost of purchased
services, materials, direct labour and an appropriate proportion of labour overheads.

Depreciation

Land is not depreciated as it has an unlimited useful life. Depreciation on other property, plant and equipment
assets is calculated on a straight-line basis so as to write-off the net cost or revalued amount of each depreciable
asset, less its estimated residual value, progressively over its estimated useful life to the Council. Management
believe that the straight-line basis appropriately reflects the pattern of consumption of all Council assets.
Assets are depreciated from the date of acquisition or, in respect of internally constructed assets, from the time an
asset is completed and commissioned ready for use.

Where assets have separately identifiable components that are subject to regular replacement, these components
are assigned useful lives distinct from the asset to which they relate. Any expenditure that increases the originally
assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated
over the remaining useful life of the asset to the Council.
The depreciable amount of improvements to or on leasehold land is allocated progressively over the estimated
useful lives of the improvements to the Council or the unexpired period of the lease, whichever is the shorter.

Depreciation methods, estimated useful lives and residual values of property, plant and equipment assets are
reviewed at the end of each reporting period and adjusted where necessary to reflect any changes in the pattern
of consumption, physical wear and tear, technical or commercial obsolescence, or management intentions. The
condition assessments performed as part of the annual valuation process for assets measured at depreciated
current replacement cost are used to estimate the useful lives of these assets at each reporting date. Road
formation has an unlimited life and is not subject to depreciation. The range of estimated useful lives for each
class of asset are detailed in the table contained in this note.




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