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2.2 Non-Financial Assets

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

Leasehold

improvements

Buildings 1

Property, plant and

equipment

Intangibles 2

Total

$'000

$'000

$'000

$'000

$'000

As at 1 July 2020

Gross book value

8,430

31,363

19,781

32,193

91,767

Accumulated depreciation and impairment

(3,356)

(5,408)

(13,528)

(15,807)

(38,099)

Total as at 1 July 2020

5,074

25,955

6,253

16,386

53,668

Additions

By purchase

80

331

3,257

0

3,668

Internally developed

0

0

0

10,121

10,121

Depreciation expense

(825)

0

(2,933)

(4,219)

(7,977)

Depreciation on right‐of‐use assets

0

(5,285)

0

(5,285)

Disposals:

Asset cost on assets disposed

(314)

(374)

(283)

0

(971)

Accumulated depreciation on assets disposed

122

302

283

0

707

Total as at 30 June 2021

4,137

20,929

6,577

22,288

53,931

Totals as at 30 June 2021 are represented by:

represented by

Gross book value

8,196

31,320

22,755

42,314

104,585

Accumulated depreciation and impairment

(4,059)

(10,391)

(16,178)

(20,026)

(50,654)

Total as at 30 June 2021

4,137

20,929

6,577

22,288

53,931

Carrying amount of Right of Use Assets

0

20,929

0

0

20,929

1. All buildings are classified as Right of Use Assets.

2. The carrying amount of intangibles comprises additions of $10.121 million of internally generated software (2020: $3.735 million).

Revaluations of non‐financial assets

All revaluations are conducted in accordance with the revalution policy stated below. No revaluations were conducted this year (Leasehold improvements 2020: $0.679 million decrement, Property plant and equipment 2020: increment $0.434 million, Intangibles 2020: increment $0.384 million).

Contractual commitments for the acquisition of property, plant, equipment and intangible assets

Contractual commitments for the acquisition of software for intangible assets includes $0.550 million (inclusive of GST) over 1 year for a software supplier (2020: $0.550 million inclusive of GST).

Accounting Policy

Assets are recorded at cost of acquisition, except where 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 $2,000, 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 AUSTRAC where there exists an obligation to restore the property back to its original condition. These costs are included in the value of leasehold improvements with a corresponding recognition of a provision for restoration obligation.

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 in 2020 AUSTRAC 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 ROU lease asset that shows indicators of impairment and an impairment loss is recognised against any ROU leased asset that is impaired.

Revaluations
Fair values for each class of asset are determined as shown below:

Asset class

Fair value measured at

Leasehold improvements

Current replacement cost, adjusted for obsolescence

Property, plant and equipment

Current replacement cost, adjusted for obsolescence

Following initial recognition at cost, items of property, plant and equipment (excluding ROU assets) are carried at fair value (or an amount not materially different to fair value) less subsequent accumulated depreciation and accumulated impairment losses. Independent valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets fair values as at the reporting date. AUSTRAC has assessed a three year update is appropriate to meet this requirement. The frequency of independent valuations is dependent upon the volatility of movements in market values for relevant assets. AUSTRAC has assessed a three year update is appropriate to meet this requirement with the most recent independent valuation conducted during May 2020 for a valuation date of 30 June 2020.

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 reverses a previous revaluation decrement of the same asset 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 is recalculated over the remaining estimated useful life of the asset on a straight line basis.

Depreciation

Depreciable property, plant and equipment assets are written‐off to their estimated residual values over their estimated useful lives to AUSTRAC 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

2021

2020

Leasehold improvements

Lease term

Lease term

Property, plant and equipment

3 to 10 years from date of purchase

3 to 10 years from date of purchase

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 indications of impairment as at 30 June 2021. Where indications of impairment exist, the recoverable amount of the asset is estimated and an impairment adjustment made if the recoverable amount is less than the 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.

Intangibles

AUSTRAC's intangibles comprise purchased and internally developed software for internal use. These assets have been internally assessed for impairment as at 30 June 2021.

Software is amortised on a straight line basis over its anticipated useful life. The useful lives of AUSTRAC’s software are 1 to 10 years (2019‐20 1 to 10 years).

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