Asset recognition threshold on acquisition
Purchases of leasehold improvements are recognised initially at cost except for purchases costing less than $10,000 which are expensed at the time of acquisition.
For leasehold improvements the estimated cost of removing and restoring the leased premises to their original condition is included in the initial cost of leasehold improvements.
Leased assets are recognised initially at the discounted value of future lease payments less incentives received.
Purchases of plant and equipment are recognised initially at cost except for purchases costing less than $10,000 which are expensed at the time of acquisition.
An item of property, plant and equipment is de-recognised upon disposal or when no further future economic benefits are expected from its use or disposal.
All assets are assessed annually for impairment.
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.
Following initial recognition at cost, valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not materially differ from fair value as at the reporting date. Fair value is determined by depreciated replacement cost for leasehold improvements and by secondary market information for plant and equipment.
Leased assets are carried at cost.
Reconciliation of changes in gross value
Additions - property & vehicles leases
Additions – make-good obligation
Additions - purchases
Additions – resources received free of charge
Contributions of assets (resources received free of charge) comprise leasehold improvements ($0.6 million) and plant and equipment ($0.2 million).
For leasehold improvements (and the make-good component) contributed the value was determined by an independent qualified valuer, JLL. The valuation of leasehold improvements used a depreciated replacement cost methodology. This approach reflects the amount a market participant would be prepared to pay to acquire or construct a substitute asset of comparable utility, adjusted for physical depreciation and obsolescence. JLL have noted in their valuation report with COVID-19 there is increased market uncertainty in the real estate market, and whilst the report can be relied upon as of the valuation date periodic reassessment is recommended.
Reconciliation of changes in accumulated depreciation
Depreciation charge for period – Leasehold improvements
Depreciation charge for period – Leased assets - right of use
Depreciation charge for period – Plant and equipment
Leasehold improvements are depreciated on a straight line basis over the unexpired period of the lease.
Plant and equipment is depreciated on a straight line basis, on the basis of the following useful lives.
The useful lives of property and related make-good is the initial lease term.
The useful life assigned to property plant and equipment is 3 years.
Useful lives are assessed annually and revised if necessary to reflect current estimates of an asset’s useful life.
Revisions in useful life affect the rate of depreciation applied for the current period and future periods.
No useful lives were revised in 2019-20.