2026/27 FINANCIAL POLICIES · Attachment 12 - Non-Current Asset Accounting Policy

Attachment 12 – Non-Current Asset Accounting Policy

 Infrastructure assets    Typically large, interconnected networks or programs of composite assets. The
                          components of these assets may be separately maintained, renewed, replaced
                          or disposed of, so that the required level and standard of service from the
                          network of assets is continuously sustained. Generally, the asset components
                          have long lives. They are fixed in place and rarely have any market value.
 Initial cost             The cost incurred to enable a new asset to be in the location and condition
                          necessary for it to operate in the manner intended.
 Intangible asset         An identifiable non-monetary asset without physical substance.
 Interim revaluation      Desktop review of unit rates whereby all asset values within an asset class are
                          adjusted by an indexation factor.
 Market value             The estimated amount for which an asset or liability should exchange on the
                          valuation date between a willing buyer and a willing seller in an arm’s length
                          transaction, after proper marketing and where the parties had each acted
                          knowledgably, prudently, and without compulsion.
 Materiality              Omissions or misstatements of items are material if they could individually or
                          collectively influence the economic decisions that users make on the basis of
                          the financial statements. Materiality depends on the size and nature of the
                          omission or misstatement judged in the surrounding circumstances. The size
                          or nature of the item, or a combination of both, could be the determining factor.
 Modern equivalent        The asset an entity would acquire or construct today if it was deprived of an
                          existing asset using modern material, techniques and design that embodies
                          equivalent service potential.
 Network                  A set of interconnected assets that rely on each other for the provision of a
                          service. Network assets are defined as a group of separately identifiable
                          assets, which, when considered together, are operating to achieve the
                          objectives involved in the provision of a particular service. All assets, which are
                          deemed to form part of a major network within Council (for example roads and
                          stormwater), will be recorded as an asset regardless of the cost of the
                          individual asset.
 Net book value           The amount at which an asset is recorded (either at cost or fair value) within
                          the financial asset register after deducting any accumulated depreciation and
                          accumulated impairment losses. This is the same as an assets carrying
                          amount or written down value
 Nominal consideration    Nil or minimal cost for which an asset has been acquired.
 Obsolescence             Obsolescence is a loss in an assets value as a result of physical deterioration
                          or external factors including functional or economic obsolescence.
                          Functional or technological obsolescence occurs when the service utility of an
                          asset may be reduced if technology has advanced to produce alternatives that
                          provide better or more efficient service.
                          Economic obsolescence occurs when the asset still maintains the same
                          service potential, but demand for that service has ceased.
 Off maintenance          Point in time that the period of “On Maintenance” applicable to contributed
                          assets either expires or ceases.
 On maintenance           Point in time that Council accepts control of an asset handed over by a
                          property developer and assets are recognised in Council’s accounts. The term
                          ‘On Maintenance’ refers to an effective warranty period whereby the
                          responsibility for rectifying defects associated with the contributed assets rests
                          with the developer.
 Pattern of consumption   The pattern on which an assets future economic benefits are expected to be
                          consumed.
 Property, plant and      Council’s recognised physical non-current assets which are tangible items that:
 equipment                a) are held for use in the production or supply of goods or services, for rental
                               to others, or for administrative purposes.
                          b) are expected to be used during more than one period.
 Recognition threshold    The value an asset should exceed on acquisition before it is recognised within
                          the financial asset register and Council balance sheet as a non-current asset.
 Recoverable amount       The higher of an assets fair value, less costs of disposal and its value in use
                          (carrying amount).
 Renewal                  Capital works that reinstate some or all of the original service potential of an
                          asset.


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