Annual Report 2021-22

Noosa Council
Notes to the Financial Statements
for the year ended 30 June 2022

Note 15. Property, Plant and Equipment (continued)
§Note/Subtotal§




(c) Impairment
Property, plant and equipment held at cost is assessed for indicators of impairment annually. If an indicator of possible
impairment exists, the Council determines the asset's recoverable amount. Any amount by which the asset's carrying
amount exceeds the recoverable amount is recorded as an impairment loss.


(d) Valuation
§Subnote§




Land and improvements, buildings, major plant and all infrastructure assets are measured on the revaluation basis, at fair
value, in accordance with AASB 116 Property, Plant and Equipment and AASB 13 Fair Value Measurement requirements.
Other plant and equipment and work in progress are measured at cost.

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 cost index for 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 land and improvements, and buildings classes in the intervening years, management performs
a desktop valuation. A desktop valuation involves management assessing the condition and cost assumptions associated with
each asset class in conjunction with the movements in the relevant indices as outlined in the valuation techniques table in
Note 15(3). Together these are used to form the basis of the desktop valuation.

During the year Council engaged APV Valuers (APV) to undertake the comprehensive valuation of Council owned land. A
significant proportion of this land is subject to special zoning restrictions and/or other limitations which impact the ability to
sell this land in an open market without these constraints being removed. AASB 13 – Fair Value Measurement requires that
assets are valued at their highest and best use for reporting purposes. APV have adopted a cost approach for the majority of
Council’s land parcels with a small proportion valued using the market approach.

In adopting the cost approach, APV have analysed and investigated property sales in areas surrounding the subject land to
inform the basis of their valuation. Where a parcel of land is specialised in nature and there are no comparable land sales
available to conduct a direct comparison approach the hypothetical development approach has been used.

The application of the cost approach to the majority of Council’s land parcels by APV is different to the market value approach
largely adopted in the previous valuation conducted in March 2018. While the market approach also uses recent sales evidence
to determine land value, a discount factor is applied to take into account zoning restrictions and constraints attached to the
land parcels. This change in approach is one of the major drivers for the significant increases observed in land valuations.

Recognised Fair Value Measurement

Council measures and recognises the following assets at fair value on a recurring basis:
  • Investment property
  • Land
  • Buildings
  • Road and bridge network
  • Storm water
  • Other infrastructure assets

Council does not measure any liabilities at fair value on a recurring basis.

Council has assets and liabilities which are not measured at fair value, but for which fair values are disclosed in the other notes.

Council borrowings are measured at amortised cost with interest recognised in profit or loss when incurred.

The fair value of borrowings disclosed in Note 20 is provided by the Queensland Treasury Corporation (QTC) and represents
the market value to extinguish the debt at balance date. This information was provided by QTC and represents the contractual
undiscounted cash flows at balance date. Liquidity risk information on Council's borrowings is also disclosed in Note 30.


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