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2.2 Non-Financial Assets

5 years

2.2A: Reconciliation of the opening and closing balances of property, plant and equipment

Leasehold improvement

Property, plant and equipment

Intangible assets

Total

$'000

$'000

$'000

$'000

As at 1 July 2019

Gross book value

358

344

683

1,385

Accumulated amortisation, depreciation and impairment

-

(169)

(43)

(212)

Total as at 1 July 2019

358

175

640

1,173

Recognition of right of use asset on initial application of AASB 16

-

4,353

-

4,353

Adjusted total as at 1 July 2019

358

4,528

640

5,526

Additions:

By purchase

43

7

-

50

Internally developed

-

-

23

23

Work in progress

-

-

302

302

Depreciation and amortisation expense

(146)

(50)

(135)

(331)

Depreciation on right-of-use assets

-

(1,741)

-

(1,741)

Transfer from work in progress

-

-

(302)

(302)

Total as at 30 June 2020

255

2,744

528

3,527

Total as of 30 June 2020 represented by:

Gross book value

401

4,704

706

5,811

Accumulated amortisation, depreciation and impairment

(146)

(1,960)

(178)

(2,284)

Total as at 30 June 2020

255

2,744

528

3,527

Carrying amount of right of use assets

-

2,612

-

2,612

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 plus transaction costs where appropriate.

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases of leasehold improvements costing less than $50,000, intangible assets costing less than $75,000, and for all other purchased of property, plant and equipment costing less than $4,500, which are expensed in the year of acquisition.

Lease 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 for 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 Commission has 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. Lease 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 less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations will depend 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 the heading of 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 reversed 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 Commission 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:

Asset Class

2020

2019

Leasehold improvements

Lease term

Lease term

Plant and equipment

5 years

5 years

Property – right-of-use

Lease term

Impairment

All assets were assessed for impairment at 30 June 2020. 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. There were no indicators of impairment at 30 June 2020.

The recoverable amount of an asset is the higher of its fair value less costs to sell 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 Commission were deprived of the asset, its value in use is taken to be its depreciated replacement costs.

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 operational 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 is 5 years (2019: 5 years).

All software assets were assessed for indications of impairment as at 30 June 2020. There were no indications of impairment as at 30 June 2020.