NOTE 01
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
tax liabilities (or assets) and the DTAs arising
from unused tax losses and unused tax credits
assumed from controlled entities in the tax
consolidated group.
Assets or liabilities arising under tax funding
agreements with the tax consolidated entities
are recognised as amounts receivable from or
payable to other entities in the Group.
Any difference between the amounts assumed
and amounts receivable or payable under the
tax funding agreement are recognised as a
contribution to (or distribution from) wholly
owned tax consolidated entities.
(o) Leases
Group as a lessee
Leases of property, plant and equipment
where the Group, as lessee, has substantially
all the risks and rewards of ownership are
classified as finance leases. Finance leases are
capitalised at the lease’s inception at the fair
value of the leased property or, if lower, the
present value of the minimum lease payments.
The corresponding rental obligations, net of
finance charges, are included in other short
term and long term payables. Each lease
payment is allocated between the liability and
finance cost. The finance cost is charged to
profit or loss over the lease period so as to
produce a constant periodic rate of interest on
the remaining balance of the liability for each
period. The property, plant and equipment
acquired under finance leases is depreciated
over the asset’s useful life or over the shorter of
the asset’s useful life and the lease term if there
is no reasonable certainty that the Group will
obtain ownership at the end of the lease term.
Leases in which substantially all the risks and
rewards of ownership are not transferred
to the Group as lessee are classified as
operating leases (note 13). Payments made
under operating leases (net of any incentives
received from the lessor) are charged to the
consolidated income statement on a straight
line basis over the period of the lease.
Group as a lessor
Leases in which the Group retains substantially
all the risks and benefits of ownership of the
leased asset are classified as operating leases.
Initial direct costs incurred in negotiating an
operating lease are added to the carrying
amount of the leased asset and recognised as
an expense over the lease term on the same
basis as rental income.
(p) Inventories
Inventories are valued at lower of cost and net
realisable value. Cost is assigned on a first in
first out basis.
(q) Property, plant and
equipment
Fair Value
The fair value for infrastructure assets is
calculated using the income method approach,
whereby the measurement reflects current
market expectations of future cashflows
discounted to their present value for each asset
grouping 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.
Fair value assessments are 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.
All other property, plant and equipment are
stated at historical cost less accumulated
depreciation, and any accumulated
impairment. Historical cost includes
expenditure that is directly attributable to the
acquisition of the items.
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