2015-11-16 GC Agenda - Item 3, Attach 1 - Annual Report 2014-15

                                                                                                                            QAO
                                                                                                                     certified statements


NOOSA SHIRE COUNCIL

Notes to the Financial Statements
For the year ended 30 June 2015

  1.13       Property, plant and equipment
             Each class of property, plant and equipment is carried at cost or fair value less. where applicable,
             any accumulated depreciation and accumulated impairment losses. Items of property. plant and
             equipment with a total value of less than $5,000, except for land and network assets (which have
             a recognition threshold of $1), are treated as an expense in the year of acquisition. All other items
             of property, plant and equipment are capitalised.


             The classes of property plant and equipment recognised by the council are reported in note 13.


 1.13 (a)         Acquisition ofassels
             Acquisitions of assets are initially recorded at 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 fees and all other establishment costs.

             Property, plant and equipment received in the form of contributions, are recognised as assets and
             revenues at fair value by Council valuation where that value exceeds 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.


 1.13 (b)        Capital and operating expenditure
             Direct labour and materials and an appropriate proportion of overheads incurred in the acquisition
             or construction of assets are treated as capital expenditure. Assets under construction are not
             depreciated until they are completed and commissioned, at which time they are reclassified from
             work in progress to the appropriate property, plant and equipment class.

             Routine operating maintenance, repair costs and minor renewals to maintain the operational
             capacity and useful life 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 selVice potential is
             capitalised.


 1.13 (e)        Valuation
            Land, buildings, infrastructure and heritage and cultural assets are measured on the revaluation
            basis. at fair value, in accordance with AASB116 Property, Plant and Equipment and AASB 13
            Fair Value Measurement. Fair value means 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 will be 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.


             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 Ihese are used to form the
            basis of a management valuation for infrastructure asset classes in each of the intelVening 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.


            On revaluation, accumulated depreciation is restated proportionately with the change in the
            carrying amount of the asset and any change in the estimate of remaining useful life.