Notes:

1. Capitalised depreciation and amortisation: Where the use of a non-current asset contributes towards the development of a new non-current asset, the associated depreciation or amortisation expense is capitalised and forms part of the carrying amount of the new asset.
2. The carrying amount of computer software totalling $11.873m (2018: $10.686m) includes purchased software $0.919m and internally generated software $10.954m.

No indicators of impairment were found for land and buildings. The National Library building ($226.819m) and land ($16.380m) upon which it stands is a special purpose building, which may not be disposed of without prior Ministerial approval. No land or buildings are expected to be sold or disposed of within the next 12 months.

No indicators of impairment were found for the National Collection.

Property, plant and equipment assessed for impairment as at 30 June 2019 and adjusted in line with the assessment. No other indicators of impairment were found.

Intangible assets were assessed for impairment and an adjustment made following the discontinuation of the Redevelopment Capital Project in 2018-19. No other indicators of impairment were found.

No heritage and cultural material is expected to be sold or disposed of within the next 12 months, however immaterial amounts of plant and equipment are expected to be disposed of as they reach their planned disposal date during the next 12 months.

No material intangible assets are expected to be sold or disposed of within the next 12 months.

Revaluation of non-financial assets

All revaluations were conducted in accordance with the revaluation policy. The effective date for all revaluations was 30 June 2019 and were undertaken by independent valuers.

A revaluation increment of $4.717m for buildings (2018: increment of $0.161m); a revaluation increment of $0.065m for land (2018: $0.315m); a nil revaluation for other property, plant and equipment (2018: $0.000m); and a revaluation decrement of $4.480m for heritage and cultural assets (2018: increment of $0.649m) were passed to the asset revaluation reserve by class and included in the equity section of the Statement of Financial Position. Leasehold improvements are held at fair value.

Accounting Policy

National Collection, plant and equipment

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.

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 $1,500 (GST exclusive), 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 purchase of library material regardless of the amount, other than serials, is capitalised as part of the National Collection, which is a heritage and cultural asset.

Revaluations

Following initial recognition at cost, property, plant and equipment and the National Collection are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. It is the NLA’s policy to seek valuation advice annually to confirm all valuations remain current.

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 class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised 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 and amortisation

Depreciable property, plant and equipment are written-off to their estimated residual values over their estimated useful lives to the NLA, using the straight-line method of depreciation. Leasehold improvements are amortised on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation/amortisation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised as appropriate.

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

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 is 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 NLA 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 economic benefits are expected from its use or disposal.

Heritage and cultural assets

The NLA’s collection assets consist of a comprehensive range of materials relating to the history and culture of Australia and of selected overseas publications. The collections have been developed over the years since 1901 when the Library was established as the Commonwealth Parliamentary Library. The National Library Act 1960 provides the NLA with a mandate to build a national collection of library material, including a comprehensive collection of library material relating to Australia and the Australian people. Australian materials collected include print publications in the form of books, maps, sheet music, and ephemeral materials like posters and leaflets; and unpublished materials such as manuscripts, pictures and oral history and folklore recordings. The overseas collection of publications provides a strong base to support research especially in the fields of South East and East Asia studies and the social sciences and the humanities. The Australian and overseas print collections are augmented by extensive microform holdings and digital resources.

The NLA’s curatorial policy can be accessed from http://www.nla.gov.au/collection-development-policy and the preservation policies may be accessed from http://www.nla.gov.au/policy-and-planning/preservation-policy.

Intangibles

The NLA’s intangibles comprise purchased software and internally developed software for internal use and other intangibles, which are heritage and cultural assets forming part of the National Collection in the form of digitised collections, archived web pages, oral history collections and digital photographs. The threshold for the recognition of software assets is $2,000 (GST exclusive). The purchase of intangible library material regardless of the amount is capitalised as part of the National Collection, which is a cultural and heritage asset. This intangible library material is not amortised as the useful life has been determined to be indefinite and useful life is subject to an annual review.

Software assets are carried at cost less accumulated amortisation and accumulated impairment loss. As at 30 June 2019 intangible heritage and cultural assets are held at cost.

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the NLA’s software are 2 to 15 years (2017-18: 2 to 15 years). The intangible NLA collections are not amortised as their useful lives have been determined as indefinite. The useful lives of these collections are reviewed annually to determine whether events and circumstances continue to support an indefinite useful life assessment for that collection.

All intangible assets were assessed for indications of impairment as at 30 June 2019.

Accounting Judgements and Estimates

Fair value of the National Collection

The NLA obtains independent valuation advice annually of the National Collection and every five years the independent valuers undertake a full revaluation (with the next full valuation planned to be undertaken in 2019- 2020). At the end of each reporting period the NLA updates the assessment of fair value for the National Collection based on the advice of the most recent independent valuation.

Due to the extent and diversity of the National Collection, a valuation of an appropriate sample is considered to be the only practicable and cost effective means of providing a reliable valuation. Consequently the valuation methodology involves a stratified random sampling of the collections. The statistical sampling methodology was developed by the University of Western Australia, Statistical Consulting Group. The aim of the stratification is to group items that are similar in nature; the way in which they are stored; and approximate value.

The valuation method adopted for the National Collection is by market based evidence where a market exists for items in the collection Those collections for which market based evidence was adopted included: rare books; rare maps; atlases and globes; the general collection; music scores; and ephemera. Market based evidence was sought from a range of sources including dealers in antiquarian material, book sellers, specialist dealers and relevant sales databases. Actual acquisition costs over the past three years for the general collection and the music collection were used to provide a guide as to the purchase price for items. The remaining collections were valued using an average market based cost approach (second hand).

The valuation of the National Collection is subject to a high level of estimation uncertainty. This uncertainty arises from a number of factors including: many of the collection items are unique and there are few comparable transactions; there is a limited active market for most of the items in the collection; the Library does not sell assets and therefore has no history of testing the market price; and the National Collection comprises many items and the valuation process therefore depends on sampling, as explained above and this gives rise to the risks inherent in sampling.

These uncertainties mean that the valuation is an estimation process and that there may be significant variation in the overall valuation.

During 2018-19 $1.398m (2017-18: $1.253m) of inventory held for sale was recognised as an expense upon sale and $0.068m (2017-18: $0.082m) of inventory held for distribution was recognised as an expense upon use.

Accounting Policy

Inventories

Inventories held for sale are valued at the lower of cost and net realisable value. Inventories held for distribution are valued at cost, adjusted for any loss of service potential.

Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows:

• raw materials and stores – purchase cost on a first-in-first-out basis; and
• finished goods and work-in-progress – cost of direct materials and labour plus attributable costs that can be allocated on a reasonable basis.

Inventories acquired at no cost or nominal consideration are initially measured at current replacement cost as at the date of acquisition.