Waikato River Authority
Annual Report
2012
www.
waikatoriver
.org.nz
35
item will flow to the Trust and the cost of the item can be measured reliably.
The costs of day-to-day servicing of property, plant, and equipment are
recognised in the surplus or deficit as they are incurred.
Depreciation
Depreciation is provided on a straight-line basis on all property, plant, and
equipment other than land, at rates that will write-off the cost (or valuation) of
the assets to their estimated residual values over their useful lives. The useful
lives and associated depreciation rates of major classes of property, plant, and
equipment have been estimated as follows:
Office equipment
2 to 5.7 years
17.5%-50%
Leasehold improvements are depreciated over the unexpired period of the lease
or the estimated remaining useful lives of the improvements, whichever is the
shorter.
The residual value and useful life of an asset is reviewed, and adjusted if
applicable, at each financial year end.
g) Intangible assets
Software acquisition and development
Acquired computer software licenses are capitalised on the basis of the costs
incurred to acquire and bring to use the specific software.
Costs that are directly associated with the development of software for internal
use are recognised as an intangible asset. Direct costs include the software
development employee costs and an appropriate portion of relevant overheads.
Staff training costs are recognised in the surplus or deficit when incurred.
Costs associated with maintaining computer software are recognised as an
expense when incurred.
Amortisation
The carrying value of an intangible asset with a finite life is amortised on a
straight-line basis over its useful life.
Amortisation begins when the asset is available for use and ceases at the date
that the asset is derecognised.
The amortisation charge for each period is recognised in the surplus or deficit.
The useful lives and associated amortisation rates of major classes of intangible
assets have been estimated as follows:
Management software
2.5 years
h) Impairment of property, plant, and equipment and intangible assets
Intangible assets that have an indefinite useful life, or are not yet available for
use, are not subject to amortisation and are tested annually for impairment.
Assets that have a finite useful life are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use.
Value in use is depreciated replacement cost for an asset where the future
economic benefits or service potential of the asset is not primarily dependent
on the asset’s ability to generate net cash inflows and where the Trust would, if
deprived of the asset, replace its remaining service potential.
The value in use for cash-generating assets and cash-generating units is the
present value of expected future cash flows.
If an asset’s carrying amount exceeds its recoverable amount, the asset is
impaired and the carrying amount is written down to the recoverable amount.
For revalued assets, the impairment loss is recognised against the
revaluation reserve for that class of asset. Where that results in a debit balance in
the revaluation reserve, the balance is recognised in the surplus or deficit.
