2016-06-29 Special Meeting Agenda

COUNCIL POLICY – NON CURRENT ASSET ACCOUNTING POLICY


Only expenditure that meets the non-current asset recognition criteria and is equal to or above the
threshold will be capitalised within the corporate asset register.

Complex Assets

A complex asset can be apportioned to individual significant components. Assets will be recognised
at component level where feasible.

The significant components of a complex asset are identified and depreciated separately. This
provides accurate and relevant information for users of the financial statements and asset
management.

A significant component is one that meets the following criteria:

    Can be separately identifiable and measurable and is able to be separated from the complex
     asset.
    May require replacement and intervention at regular intervals during the life of the complex asset.
    Has a significant value in relation to the total cost of the complex asset.
    May have a different estimated useful life from the complex asset so that failure to depreciate it
     separately would result in a material difference in the annual depreciation expense for that asset.

When replacing a component of a complex asset the existing written down value of the original
component should be written off.

Components will be capitalised as long as the total capital project expenditure meets the asset
recognition threshold.

Networked Asset

A network is a grouping of multiple assets that are individually below the capitalisation threshold. These
assets perform a whole service and require recognition in the financial statements due to their
collective value, e.g. roads and stormwater.

Operating Asset

Assets below the threshold may still be taken up in the asset register where required for asset
management purposes as operating (non-financial) assets, including highly attractive items such as
electrical equipment and small plant.


4.     Asset Valuation

Assets are to be recorded and maintained in the corporate asset register as either a financial asset or
an operating (non-financial) asset. On initial recognition, non-current assets will be measured at fair
value based on the cost of the asset or, for donated / contributed assets, an initial valuation undertaken
by a suitably qualified person.

Costs need to be classified as either:

    Capital, which is included in the cost of an asset. Capital costs are accounted for in the Statement
     of Financial Position of the Council and depreciated. They can be for a new, upgrade/renewal or
     replacement of an asset; or
    An expense, which is accounted for in the Comprehensive Income Statement and affects the
     Council’s operating result.




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