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2.2 Non-Financial Asset

2.2A: Reconciliation of the Opening and Closing Balances of Property Lease, Infrastructure, Plant and Equipment and Intangibles

Reconciliation of the Opening and Closing Balances of Property Lease, Infrastructure, Plant and Equipment and Intangibles for 2020

Property Lease

Lease Improvements

Lease Improv-ements - Work in Progress

Computer, Plant and Equipment

Intangibles

Intangibles - Work in Progress

Total

$’000

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

0

2,213

5

66

1,949

192

4,420

Accumulated depreciation, amortisation and impairment

0

(722)

0

(49)

(1,210)

0

(1,981)

Total as at 1 July 2019

0

1,491

5

17

739

192

2,439

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

5,951

0

0

0

0

0

5,951

Adjusted total as at 1 July 2019

5,951

1,491

5

17

739

192

8,390

Additions

Purchase

0

0

0

139

458

0

597

Work in progress transfer

(192)

Revaluations and impairments recognised in other comprehensive income

0

132

0

39

0

0

171

Depreciation and amortisation

0

(771)

0

(46)

(385)

0

(1,202)

Depreciation on right-of-use assets

(2,975)

0

0

0

0

0

(2,975)

Total as at 30 June 2020

2,975

852

5

149

812

0

13,371

Total as at 30 June 2020 represented by

Gross book value

5,951

852

5

149

2,407

0

9,364

Accumulated depreciation, amortisation and impairment

(2,975)

0

0

0

(1,595)

0

(4,571)

Total as at 30 June 2020

2,975

852

5

149

812

0

4,794

Carrying amount of right-of-use assets

2,975

0

0

0

0

0

2,975

No indicators of impairment were found for infrastructure, plant and equipment and intangibles.

No infrastructure, plant and equipment and intangibles are expected to be sold or disposed of within the next 12 months.

Revaluations of non-financial assets

All revaluations were conducted in accordance with the revaluation policy stated at Note 2.2. On 30 June 2020, an independent valuer conducted the revaluations.

Reconciliation of the opening and closing balances of Infrastructure, Plant and Equipment and Intangibles for 2019

Property Lease

Lease Improvements

Computer, Plant and Equipment

Intangibles

Intangibles - Work in Progress

Total

$’000

$’000

$’000

$’000

$’000

$’000

As at 1 July 2018

Gross book value

0

2,114

68

1,426

24

3,632

Accumulated depreciation, amortisation and impairment

0

0

0

(1,071)

0

(1,071)

Total as at 1 July 2018

0

2,114

68

355

24

2,561

Additions

Purchase

0

99

0

523

168

790

Depreciation and amortisation

0

(722)

(49)

(139)

0

(910)

Disposals

0

0

(2)

0

0

Total as at 30 June 2019

0

1,491

17

739

192

2,441

Total as at 30 June 2019 represented by

Gross book value

-0

2,213

66

1,949

192

4,420

Accumulated depreciation, amortisation and impairment

0

(722)

(49)

(1,210)

0

(1,981)

Total as at 30 June 2019

0

1,491

17

739

192

2,439

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.
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 costing less than $5,000 which are expensed in the year of acquisition (other than where they form part of a group of similar items which 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 in property leases taken up by the entity where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Commission’s leasehold improvements with a corresponding provision for the ‘make good’ recognised.


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 Australian Human Rights 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 (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 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 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:

2020

2019

Leasehold improvements

Lease term

Lease term

Computer, plant and equipment

4 to 10 years

4 to 10 years

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 2019. 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 Commission’s software are 2 to 5 years (2019: 2 to 5 years years).
All software assets were assessed for indications of impairment as at 30 June 2020.


Accounting Judgements and Estimates
The fair value of infrastructure, plant and equipment has been taken to be the market value of similar assets as determined by an independent valuer.

2020

2019

$’000

$’000

2.2B: Other Non-Financial Assets

Prepayments

346

174

Total other non-financial assets

346

174

Other non-financial assets expected to be recovered

No more than 12 months

341

174

More than 12 months

5

0

Total other non-financial assets

346

174

No indicators of impairment were found for other non-financial assets.