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Financial Position

This section analyses the AAT's assets used to conduct its operations and the operating liabilities incurred as a result.

Employee related information is disclosed in the People and Relationships section.

3.1 Financial Assets

3.1 Financial Assets

2021

2020

$’000

$’000

3.1A: Cash and cash equivalents

Cash on hand or on deposit

3,320

3,766

Total cash and cash equivalents

3,320

3,766

Accounting Policy

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

a) cash on hand

b) deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

3.1B: Trade and other receivables

Goods and services receivables

Goods and services

2,623

534

Total goods and services receivables

2,623

534

Appropriation receivables

Appropriation receivables

72,774

89,968

Total appropriation receivables

72,774

89,968

Other receivables

Statutory receivables

1,066

641

Total other receivables

1,066

641

Total trade and other receivables (gross)

76,463

91,143

Total trade and other receivables (net)

76,463

91,143

Credit terms for goods and services were within 28 days (2020:28 days).

Accounting Policy

Financial assets

Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest. These payments are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

3.2 Non-Financial Assets

3.2 Non-Financial Assets

3.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles1

Buildings

Plant and equipment

Computer Software1

Total

$’000

$’000

$’000

$’000

As at 1 July 2020

Gross book value

276,112

7,278

23,567

306,957

Accumulated depreciation, amortisation and impairment

(6,311)

(2,692)

(19,156)

(28,159)

Total as at 1 July 2020

269,801

4,586

4,411

278,798

Additions

Purchase

7,081

1,915

6,473

15,469

Right-of-use assets

14,324

-

-

14,324

Revaluations recognised in other comprehensive income

-

309

-

309

Impairments recognised in net cost of services

-

-

(30)

(30)

Depreciation and amortisation

(6,575)

(1,780)

(2,080)

(10,435)

Depreciation on right-of-use assets

(19,363)

-

-

(19,363)

Reclassification

-

12

(12)

-

Disposals

-

(5)

-

(5)

Total as at 30 June 2021

265,268

5,037

8,762

279,067

Buildings

Plant and equipment

Computer Software1

Total

$’000

$’000

$’000

$’000

Total as at 30 June 2021 represented by

Gross book value

297,517

9,193

30,040

336,750

Accumulated depreciation, amortisation and impairment

(32,249)

(4,156)

(21,278)

(57,683)

Total as at 30 June 2021

265,268

5,037

8,762

279,067

Net book value of right-of-use assets

225,932

-

-

225,932

1. The carrying amount of computer software included $6.5m (2020:$2m) purchased software. Intangible assets are reviewed on an annual basis by all asset owners for obsolete assets due to improvement of technology. All obsolete assets are disposed on an annual basis.

Accounting Policy

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value and include transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases that cost less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items that are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item, and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions taken up by the AAT where an obligation exists to restore the property to its original condition. These costs are included in the value of the AAT's leasehold improvement with a corresponding provision for the ‘make good’ recognised.

Leased Right of Use (ROU) Assets

Leased ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted by Commonwealth lessees as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned.

On initial adoption of AASB 16 the AAT adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right of use lease asset that shows indicators of impairment and an impairment loss is recognised against any right of use lease asset that is impaired. Leased ROU assets continue to be measured at cost after initial recognition in Commonwealth agency, GGS and Whole of Government financial statements.

Revaluations

Following initial recognition at cost, property, plant and equipment (excluding ROU assets) are carried at fair value (or an amount not materially different from fair value)less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse a previous revaluation increment for that class.


Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Depreciation
Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the entity using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

2021

2020

Buildings

Lessor or estimated useful life and lease terms

Lessor or estimated useful life and lease terms

Plant and equipment

3–20 years

3–20 years

Computer software

3–20 years and reviewed for impairment annually

3–20 years and reviewed for impairment annually

The depreciation rates for ROU assets are based on the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

Impairment

All assets were assessed for impairment at 30 June 2021.
Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the entity were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Intangibles

The entity's intangibles comprise internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the entity's software are 3 to 20 years (2020:3 to 20 years).

All software assets were assessed for indications of impairment as at 30 June 2021.

Accounting Judgements and Estimates
In the process of applying the accounting policies listed in this note, the AAT has made the following judgements that have the most significant impact on the amounts recorded in the financial statements:

- the fair value of property, plant and equipment has been taken to be the fair value of similar assets as determined by an independent valuer every 5 years for a comprehensive valuation and every 3 years for a desktop valuation. During the intervening years the AAT consider the nature of each asset, whether there has been any substantial change in the technology related to the use of each asset which may cause a reduction in the value of the asset.

A comprehensive valuation was undertaken at 30 June 2019.
The AAT has considered the nature of its assets and do not believe there has been a material variance in market price since that date.

A desktop valuation was undertaken at 30 June 2021 by an independent valuer and the revalued amount accounted in the balance sheet.

The AAT has assessed the impact of COVID-19 on the financial statements, including the potential for movements in the fair value of non-current assets and the potential for impairment of other assets.The AAT has concluded that COVID-19 is not expected to have a significant impact on transactions and balances recorded in the financial statements.

3.3 Payables

3.3 Payables

2021

2020

$’000

$’000

3.3A: Other payables

Salaries and wages

2,258

1,684

Superannuation

279

415

Total other payables

2,537

2,099

3.4 Interest Bearing Liabilities

3.4 Interest Bearing Liabilities

2021

2020

$’000

$’000

3.4A: Leases

Opening lease liability 30 June 2020

232,136

-

Lease liabilities - transition of AASB16 - Leases held at 1 July 2019

-

240,658

Less principal lease payments

( 12,886)

(11,514)

Add new lease liabilities

14,151

9,755

Add lease incentive received post transition

2,939

-

Less cancelled leases

-

(6,763)

Total leases

236,340

232,136

Total cash outflow for leases for the year ended 30 June 2021 was $20,317 (2020: $16,098)

Maturity analysis - contractual undiscounted cash flows

Within 1 year

19,383

17,213

Between 1 to 5 years

81,908

72,568

More than 5 years

161,474

181,011

Total leases

262,765

270,792

The AAT in its capacity as lessee has leased premises in the capital cities of each State. All leases are at market prices.

3.5 Other Provisions

3.5 Other Provisions

2021

2020

$’000

$’000

3.5A: Other provisions

Provision for restoration

Total

Total

$’000

$’000

$’000

As at 1 July 2020

617

617

1,155

Additional provisions made

428

428

Amounts used

-

-

(54)

Gain on onerous lease terminated

-

-

(484)

Total as at 30 June 2021

1,045

1,045

617

Accounting Judgements and Estimates

Provision for restoration

The AAT is required to restore 4 (2020: 2) leased commercial office accommodation to their original condition at the conclusion of their leases. The AAT made a provision to reflect the present value of the anticipated future costs The calculation of this provision requires assumptions in determining the costs required to restore the premises to their original condition, which, because of the long-term nature of the liability, involves significant uncertainty. This uncertainty may result in future actual expenditure that differs from amounts currently provided. The provision recognised is reviewed annually and updated based on the facts and circumstances known at the time.