2016-06-29 Special Meeting Agenda

COUNCIL POLICY – NON CURRENT ASSET ACCOUNTING POLICY


5      Purchased Assets

The cost of an item of property, plant and equipment comprises:

    Its purchase price, including import duties and non-refundable purchase taxes, after deducting
     trade discounts and rebates.
    Any costs directly attributable to bringing the asset to the location and condition necessary for it to
     be capable of operating in the manner intended by management;

Directly attributable costs include:

a)     Costs of employee expenses arising directly from the construction or acquisition of the item of
       property, plant and equipment;
b)     Costs of site preparation;
c)     Initial delivery and handling costs;
d)     Installation and assembly costs;
e)     Costs of testing whether the asset is functioning properly; and
f)     Professional fees.

Once the asset is in the location and condition necessary for it to be capable of being operated in
the manner intended, costs will no longer be of a capital nature.

Costs of assets incurred after initial recognition are to be capitalised whenever the associated work
either renews, extends or upgrades the asset’s underlying service potential.

6      Contributed Assets

Non-current assets that are donated or contributed to Council at no cost, or for a nominal cost, will
need to be brought to account at fair value as at the date of acquisition. This is achieved by utilising
existing unit rates or by a valuation undertaken by a suitably qualified person.

7      Assets Not Previously Recognised

Material assets not recognised in previous periods that subsequently meet the recognition criteria will
be recognised from the date that the criteria are met. Where assets are identified that have not been
previously recognised due to error, e.g. during asset verification, this is treated as the correction of an
error under AASB 108 Accounting Policies Changes in Accounting Estimates and Errors. The error
provisions require that the error should be corrected by making the entry that should have been made
at the time the error occurred.

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:

    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.




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