NOTE 01
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
each cash generating unit that would be considered
reasonable by a normal market participant. The
estimated future cash flows are discounted to their
present value using a post-tax discount rate that
reflects current market assessments of the time value
of money and the business risk.
(iii) Impairment
The carrying amounts of the Group’s non-financial
assets, other than inventories and deferred tax assets,
are reviewed at each reporting date to determine
whether there is any indication of impairment. If any
indication exists, then the asset’s recoverable amount
is estimated. An impairment loss is recognised if the
carrying amount of an asset or cash-generating unit
(CGU) exceeds it recoverable amount.
The recoverable amount of an asset or CGU is the
greater of its value in use and its fair value less costs
to sell. In assessing the fair value, the estimated cash
flows inclusive of growth opportunities and capital
expenditure are discounted to their present value
using a post-tax discount rate that reflects current
market assessments of the time value of money and
the risk specific to the CGU. In assessing value in use,
the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects
current market assessments of the time value of money
and the risks specific to the CGU. For impairment
testing, assets are grouped together into the smallest
group of assets that generates cash inflows from
continuing use that are largely independent of the cash
inflows of other assets or CGUs.
Impairment losses or reversals of losses are recognised
in profit and loss. Impairment losses recognised are
allocated to the asset carrying amounts within the
CGUs on a pro rata basis. An impairment loss is reversed
only to the extent that the asset’s carrying amount does
not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
As the group applies fair value less cost to sell
valuations to most non-financial assets, the carrying
value will be the fair value less cost to sell which is
the estimated recoverable amount and therefore a
separate impairment calculation is not required.
(iv) Revaluation
The Group’s infrastructure assets were revalued as at
30 June 2014. These assets were revalued using the
income method approach to provide an estimate of
the fair value of infrastructure assets as there are no
similar market quoted assets. Revaluation of assets is
only applied to infrastructure assets on the basis that
non infrastructure such as motor vehicles, information
technology and other non-infrastructure assets are
transferable within the Group and have a short life and
a ready market. The written down value of these assets
is in line with their fair value less cost to sell.
Any revaluation increment is credited to the asset
revaluation reserve included in the equity section of
the consolidated balance sheet, except to the extent
that it reverses a revaluation decrement of the same
asset previously recognised in the consolidated income
statement, in which case the increase is recognised
in the consolidated income statement (net of tax).
Revaluation increments and decrements recognised
are allocated to the infrastructure asset carrying
amounts within the CGUs on a pro rata basis.
The Group has elected that the deemed cost of assets
on hand at 30 June 2005 is the revalued amount of
those assets. Any accumulated depreciation as at
the revaluation date is eliminated against the gross
carrying amount of the asset and the net amount
is restated to the revalued amount of the asset.
Items of property, plant and equipment are either
derecognised on disposal or when no further future
economic benefits are expected from its use. Gains
and losses on disposals are determined by comparing
proceeds with the carrying amount and are included in
the consolidated income statement. Upon disposal or
derecognition, any revaluation reserve relating to the
asset is transferred to retained earnings.
(q) Inventories
Inventories are valued at lower of cost and net realisable
value. Cost is assigned on a first in first out basis.
(r) Property, plant and equipment
Infrastructure assets are shown at fair value (inclusive
of revaluations and impairments) less accumulated
depreciation, based on periodic, but at least triennial
revaluations. Any accumulated depreciation at the
date of revaluation is eliminated against the gross
carrying amount of the asset and the net amount
is restated to the revalued amount of the asset. All
other property, plant and equipment are stated at
historical cost less accumulated depreciation, and
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