2017-06-06 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA   6 JUNE 2017




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SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                          6 JUNE 2017

   COUNCIL POLICY - NON CURRENT ASSET ACCOUNTING POLICY

   8     Assets under Construction (Work in Progress)
   Work in Progress (WIP) represents the accumulated costs of constructed assets e.g. costs associated
   with constructing or rehabilitating assets such as stormwater, roads, buildings and parks.
   The cost base of self-constructed assets is similar to the cost base for assets purchased including the
   following components:
   e     Direct materials, including stock issues;
   °     Direct and contract labour including on-costs; and
   °     Plant hire.

   Where a project is to be completed in stages, capitalisation of each stage may still occur providing the
   asset recognition criteria is met.

   9     Asset Expenditure
   Items that are less than the recognition threshold and do not form part of a complex asset or network
   are treated as an operating expense.
   The following initial costs are expensed not capitalised:
   °     General administration and other indirect overhead costs;
   °     Training costs; and
   °     Financing Costs - Interest charged on borrowings to fund asset purchases.

   Expenditure after Initial Purchase
   Costs incurred subsequent to the initial purchase of the asset will only be capitalised when it
   improves the condition of the asset beyond its original intended use or service capacity. This can
   occur through:
   °     Extending the service potential provided by the asset; or
   °     Extending the useful life of the asset.

   Repairs and maintenance are to be expensed as incurred, this includes expenditure incurred to
   restore an asset to its predetermined condition and/or its required service level. Examples include:
   °     Work conducted to preserve the asset’s condition and prevent deterioration and failure, i.e.
         regular servicing of vehicles.
   e     Restoration of an asset to its original state using the same / similar material.
   e     Replacement of minor asset components.

   Spare Parts
   Minor items of spare parts are charged to the item of plant and expensed. Major spare parts and
   stand-by equipment are recognised as plant and equipment when:
   °     The expenditure exceeds the asset recognition threshold; and
   e     The benefit from the item will be for more than one financial year.

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