NOTE 01
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Investments in subsidiaries are accounted for
at cost in the individual financial statements of
Australian Rail Track Corporation Ltd and are
not material to the Group.
(h) Revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable to the
extent it is probable the economic benefit
will flow to the Group and the revenue can
be reliably measured. Amounts disclosed as
revenue are net of returns, trade allowances,
rebates and amounts collected on behalf of
third parties.
(i) Access revenue
Access revenue recognised comprises
amounts received and receivable by the Group
granting operators access to the rail network
during the year.
(j) Interest revenue and
borrowing expenses
Interest revenue and borrowing costs
are recognised as they accrue using the
effective interest method. This is a method of
calculating the amortised cost of a financial
asset or liability and allocating the interest and
other costs over the relevant period using the
effective interest rate, which is the rate that
exactly discounts estimated future cash flows
through the expected life of the financial asset
or liability to the net carrying amount of the
financial asset or liability.
Borrowing costs directly attributable to the
acquisition, construction or production of a
qualifying asset are capitalised as part of the
cost of that asset. Borrowing costs consist of
interest and other costs incurred in connection
with the borrowing of funds.
Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings
are subsequently measured at amortised
cost. Fees paid on the establishment of loan
facilities are recognised as transaction costs
of the loan to the extent that it is probable
that some or all of the facility will be drawn
down. To the extent there is no evidence that
it is probable that some or all of the facility
will be drawn down, the fee is capitalised as a
prepayment and amortised over the period of
the facility to which it relates.
(k) Recoveries and expenses
associated with rail access
related incidents
Income attributable to insurance or other
recoveries arising from rail access related
incidents is only recognised where a contractual
agreement is in place and receipt of amounts
outstanding is virtually certain. Costs of
rectification are recognised when incurred.
Where the Group has suffered damage to its
rail network due to other parties, the recourse
is commercial negotiation and, if not successful,
legal proceedings are initiated, as appropriate.
Potential liabilities and assets are reviewed
throughout the year and finalised at reporting
date for inclusion in the financial statements.
Inclusion of liabilities or assets relating to rail
access related incidents occurs where the
Group can reliably measure costs or recoveries.
(l) Government grants
The grants received primarily arise from rail
projects delivered under the Infrastructure
Investment Programme, including the Inland
Rail Project, to improve efficiency and safety
of the National Land Transport Network.
Previously the Company has been awarded
other grants from the Government of Victoria
and other state funded projects. Grants from
the government are recognised at their fair
value where there is a reasonable assurance
that the grant will be received and the Group
will comply with all attached conditions. Where
the grants have attached conditions and/or
are project specific, they are recognised at
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