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2.13 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost of inventory is comprised of section costs and other
direct costs using the weighted average cost basis. Net realisable value is the estimated selling price in the ordinary course of
business less estimated costs of completion and the estimated costs necessary to make the sale.
2.14 Biological assets ‑ livestock and trees
Biological assets are measured at fair value less estimated point of sale costs. The fair value of livestock is determined based on
market prices of livestock of similar age, breed and genetic merit. The fair value of trees is determined annually by independent
valuers by calculating the crop expectation and future value discounted back to the present value, based on the rotation age
of the crop and the current market prices of the logs. The valuation of Redwood trees is based on the current replacement cost
method used for young trees.
2.15 Financial assets and liabilities
Recognition and measurement
A financial asset or liability is recognised if the Group becomes party to the contractual provisions of the instrument. Regular
way purchases and sales of financial assets and liabilities are recognised on the trade date, the date on which the Group commits
to purchase or sell the asset or liability. A financial asset or liability is recognised initially at its fair value and in the case of a
financial asset or liability measured at amortised cost includes transaction costs that are directly attributable to the acquisition
or issue of the instrument.
Financial assets and liabilities recorded at fair value through the profit and loss are designated at initial recognition.
Financial assets and liabilities measured at amortised cost
Financial assets and liabilities measured at amortised cost are non‑derivative financial assets and liabilities which meet the
following criteria:
a) held within a business model whose objective is to hold an instrument in order to collect contractual cash flows; and
b) the contractual terms of the instrument gives rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
A gain or loss on a financial asset and liability that is measured at amortised cost and is not part of a hedging relationship is
recognised in profit and loss when the instrument is de‑recognised, impaired or reclassified and through the amortisation process.
Trade and other receivables are classified as financial assets measured at amortised cost. Trade and other payables and debt
instruments are classified as financial liabilities measured at amortised cost.
Financial assets and liabilities measured at fair value through profit or loss
Financial assets and liabilities are measured at fair value unless measured at amortised cost. At initial recognition, the Group may
make an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment
in an equity instrument within the scope of NZ IFRS 9 ‘Financial Instruments’ that is not held for trading. If the Group makes
this election, it shall recognise in profit or loss dividends from that investment when the Group’s right to receive payment of
the dividend is established in accordance with NZ IAS 18 ‘Revenue’. The Group may also at initial recognition, designate an
instrument as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or
recognition inconsistency that would otherwise arise from measuring the instruments or recognising gains and losses on them
on different bases.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for
unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length
transaction pricing models refined to reflect the Group’s specific circumstances.
A gain or loss on a financial asset or liability that is measured at fair value and is not part of a hedging relationship shall be
recognised in profit and loss unless the financial asset is an investment in an equity instrument and the Group has made an
2. Summary of significant accounting policies (continued)
waikato raupatu lands trust
notes to the financial statements
f o r t h e y e a r e n d e d 3 1 m a r c h 2 0 1 4
