Accounting Policies Non-Departmental for the Year Ended 30 June 2007
Reporting Entity
The following non-departmental schedules record the revenue and receipts, expenses, assets, liabilities, contingencies and commitments that the Ministry administers on behalf of the Crown. These, together with associated notes, are presented below.
Measurement Basis
Measurement and recognition rules applied in the preparation of these non-departmental schedules are consistent with generally accepted accounting practice and Crown accounting policies.
Accounting Policies
The following particular accounting policies that materially affect the measurement of financial results and financial position have been applied:
Revenue and Expenditure
Revenue and expenditure are recognised when earned or incurred respectively and are reported in the financial period to which they relate.
Receivables
Receivables are recorded at estimated realisable value, after providing, where necessary, for doubtful and uncollectible debts.
Inventories
Inventories are stated at the lower of cost (calculated on a "first in, first out" basis) or net realisable value.
Property, Plant and Equipment
Items of property, plant and equipment costing $2,000 (excluding GST) or more are capitalised and are initially recorded at cost. The carrying amounts of property, plant and equipment are reviewed annually to determine if there is any indication of impairment. Where an asset's recoverable amount is less than its carrying amount, it will be reported at its recoverable amount and an impairment loss will be recognised. Losses resulting from impairment are reported in the Schedule of Revenue and Expenditure, unless the asset is carried at a revalued amount, in which case any impairment loss is first treated as a revaluation decrease.
Accumulated depreciation at revaluation date may be either restated proportionately or eliminated against the gross carrying amount so that the carrying amount after revaluation equals the revalued amount. The elimination approach is applied unless otherwise indicated.
Realised gains arising from sales of property, plant and equipment are recognised in the Schedule of Revenue and Expenditure in the period in which the transaction occurs. Unrealised gains arising from changes in the value of property, plant and equipment are recognised at balance date. To the extent gains reverse losses previously charged to the Schedule of Revenue and Expenditure, the gains are credited to the Schedule of Revenue and Expenditure. Otherwise, gains are credited to an asset revaluation reserve for that class of assets.
Realised losses arising from sale of property, plant and equipment are recognised in the Schedule of Revenue and Expenditure in the period in which the transaction occurs.
Unrealised losses arising from changes in the value of property, plant and equipment are recognised in the period in which they occur. Unrealised losses are first applied against the revaluation reserve for that class of asset. The balance, if any, is charged to the Schedule of Revenue and Expenditure.
Depreciation
Depreciation of property, plant and equipment is provided on a straight line basis so as to allocate the depreciable amount of assets over their useful lives. The depreciable amount is the cost or revalued amount less the residual value. The estimated useful lives are:
| Buildings |
20 to 50 years |
| Infrastructure |
13 to 14 years |
| Whirinaki Power Station |
11 years |
| Textphone Equipment |
4 years |
All property, plant and equipment other than the Whirinaki reserve generation power station ($14,000,000) are assumed to have no residual value.
Capital work in progress is recognised as costs are incurred. Depreciation is not recorded until the asset is fully operational.
Provisions for NZTE Grants
Grants are administered and awarded by New Zealand Trade and Enterprise for a variety of purposes spanning a variety of periods. Upon being awarded, they are recognised as a liability. Subsequent payment of the grant amounts is conditional upon milestone achievement, so for each different type of grant, an assessment is made based on historical data of the probability of the grant actually being taken up. The liability is then adjusted to reflect the revised probable future payment.
Commitments
Future expenses and liabilities to be incurred on contracts that have been entered into at balance date are disclosed as commitments (at the point a contractual obligation arises) to the extent that there are equally unperformed obligations. Commitments relating to employment contracts are not disclosed.
Contingent Liabilities
Contingent liabilities and assets are disclosed at the point at which the contingency is evident.
Goods and Services Tax (GST)
The Schedule of Non-Departmental Expenditure and Appropriations is exclusive of GST (where applicable). The Schedule of Assets and Liabilities is exclusive of GST, except for Payables and Receivables, which are GST inclusive. All other figures are GST exclusive (where applicable).
Any payments made for GST input tax are made under the authority of Section 6 of the Public Finance Act.
These non-departmental balances are consolidated into the Crown Financial Statements, and therefore, readers of these schedules should also refer to the Crown Financial Statements for the year ended 30 June 2007.
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