Annual Report 2015-16

Financial Statements 2016

Noosa Shire Council

 Notes to the Financial Statements
 for the year ended 30 June 2016
Note 1. Summary of Significant Accounting Policies (continued)

each depreciable asset, less its estimated residual     (1.n)   Liabilities - Employee Benefits
value, progressively over its estimated useful life to
the Council. Management believe that the straight-      _Liabilities are recognised for employee benefits such
line  basis  appropriately reflects the  pattern  of    as wages and salaries, annual leave and long service
consumption of all Council assets.                      leave   in  respect  of  services  provided   by  the
                                                        employees up to the reporting date.      Liabilities for
Assets are depreciated from the date of acquisition   | employee benefits are assessed at each reporting
or, in respect of internally constructed assets, from   date. Where it is expected that the leave will be paid
the time an asset is completed and commissioned __ in the next twelve months the liability is treated as a
ready for use.                                          current liability. Otherwise the liability is treated as
                                                        non-current.
Where     assets    have    separately   identifiable
components that are subject to regular replacement,     Annual leave
these components are assigned useful lives distinct
from the asset to which they relate. Any expenditure    A liability for annual leave is recognised. Amounts
that increases the originally assessed capacity or      expected   to  be   settled within  12   months   are
service potential of an asset is capitalised and the    calculated on current wage and salary levels and
new depreciable amount is depreciated over the          includes related employee on-costs. Amounts not
remaining useful life of the asset to the Council.      expected   to  be   settled within  12   months   are
                                                        calculated on projected future wage and salary levels
The depreciable amount of improvements to or on _ and related employee on-costs, and are discounted to
leasehold land is allocated progressively over the      present values. This liability represents an accrued
estimated useful lives of the improvements to the — expense and is reported in Note 14 as a payable. As
Council or the    unexpired  period of the    lease,    council does not have an unconditional right to defer
whichever is the shorter.                               this liability beyond  12 months annual     leave   is
                                                        classified as a current liability.
Depreciation methods, estimated useful lives and
residual values of property, plant and equipment        Long service leave
assets are reviewed at the end of each reporting
period and adjusted where necessary to reflect any      _A liability for long service leave is measured as the
changes in the pattern of consumption, physical         present value of the estimated future cash outflows to
wear    and    tear,   technical   or    commercial     be   made   in  respect   of  services  provided   by
obsolescence,   or   management     intentions. The     employees up to the reporting date. The value of the
condition assessments performed as part of the          liability is calculated using current pay rates and
annual valuation process for assets measured at         projected future increases in those rates and includes
depreciated current replacement cost are used to        related  employee    on-costs.  The   estimates   are
estimate the useful lives of these assets at each     —_ adjusted for the probability of the employee remaining
reporting date. Details of the range of estimated       in the Council's employment or other associated
useful lives for each class of asset are shown in       employment which would result in the Council being
Note 11.                                                required to meet the liability. Adjustments are then
                                                        made to allow for the proportion of the benefit earned
(1.m)   Payables                                        to date, and the result is discounted to present value.
                                                        The   interest rates  attaching  to   Commonwealth
Trade creditors are recognised upon receipt of the | Government guaranteed securities at the reporting
goods or services ordered and are measured at the       date are used to discount the estimated future cash
agreed purchase/contract price net of applicable        outflows to their present value.      This liability is
discounts other than contingent discounts. Amounts _ reported in Note 16 as a provision.
owing are unsecured and are generally settled on 30
day terms.                                              Where employees have met the prerequisite length of
                                                        service and council does not have an unconditional
                                                        right to defer this liability beyond 12 months long
                                                        service leave is classified as a current liability.
                                                        Otherwise it is classified as non-current.

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