55 TE PŪRONGO 2013
revaluation reserve in respect of those assets are transferred
to retained earnings.
Subsequent costs
Costs incurred subsequent to initial acquisition are
capitalised only when it is probable that future economic
benefits or service potential associated with the item will
flow to Te Wānanga o Aotearoa 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.
4.Intangible assets
Computer software
Computer software is separately acquired and capitalised at
its cost as at the date of acquisition. After initial recognition,
separately acquired intangible assets are carried at cost less
accumulated amortisation and accumulated impairment
losses.
Programme development costs
Programme development costs relate to development of
educational courses and are capitalised once accreditation
has been received and when it is probable that future
economic benefit arising from use of the intangible asset will
flow to the group.
Following initial recognition of programme development
costs, the cost model is applied and the asset is carried at cost
less accumulated amortisation and accumulated impairment
losses.
Amortisation
A summary of policies applied to the group’s intangible
assets is as follows:
The amortisation period and amortisation method for each
class of intangible asset having a finite life are reviewed at
the end of each financial year. If the expected useful life
or expected pattern of consumption is different from the
previous assessment, changes are made accordingly.
The carrying value of each class of intangible asset is reviewed
annually for indicators of impairment. Intangible assets are
tested for impairment where an indicator of impairment
exists.
Gains or losses arising from de-recognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and
are recognised in the surplus or deficit when the asset is de-
recognised.
All other research and development costs are recognised as
expenses in the surplus or deficit in the year in which they
are incurred.
5.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 indicators of impairment at each balance
date. When an asset is found to be impaired, a recoverable
amount is estimated. 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 a term for depreciated replacement cost for an
asset where the future economic benefits or service potential
of the asset are not primarily dependent on the asset’s
ability to generate net cash inflows and where Te Wānanga o
Aotearoa would, if deprived of the asset, replace its remaining
future economic benefits or service potential.
The value in use for cash-generating assets 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.
For assets not carried at a revalued amount, the total
impairment loss is recognised in the surplus or deficit.
The reversal of an impairment loss on a revalued asset is
credited to other comprehensive income and increases the
asset revaluation reserve for that class of asset. However, to
the extent that an impairment loss for that class of asset was
previously recognised in the surplus or deficit, a reversal of
the impairment loss is also recognised in the surplus or deficit.
For assets not carried at a revalued amount, the reversal of an
impairment loss is recognised in the surplus or deficit.
6. Other financial assets
Financial assets are initially recognised at fair value plus
transaction costs unless they are carried at fair value through
surplus or deficit in which case the transaction costs are
recognised in the surplus or deficit.
Purchases and sales of financial assets are recognised on
trade-date, the date on which the organisation and group
commits to purchase or sell the asset. Financial assets are
derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and
the organisation and group has transferred substantially
all the risks and rewards of ownership. Financial assets are
classified into the following categories for the purposes of
measurement:
Useful lives
Method used
Internally
generated/
acquired
Computer
software
Finite - 5 years
Straight line
method
Separately
acquired
Programme
development costs
Finite - 5 years
Straight line method
from capitalisation
Internally generated/
separately acquired
