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Note 3.2 Non-Financial Assets

3.2: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles:

Reconciliation of the opening and closing balances for 2020

Buildings - Right of use Asset

Leasehold improvements

Plant and equipment

Computer Software

Total

$

$

$

$

$

As at 1 July 2019

Gross book value

-

1,457,481

41,000

24,505

1,522,986

Accumulated depreciation, amortisation and impairment

-

(351,009)

(25,387)

(24,505)

(400,901)

Total as at 1 July 2019

-

1,106,472

15,613

-

1,122,085

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

3,185,087

-

-

-

3,185,087

Adjusted total as at 1 July 2019

3,185,087

1,106,472

15,613

-

4,307,172

Additions:

Purchased

-

-

20,510

-

20,510

Depreciation and amortisation

-

(296,672)

(11,209)

-

(307,881)

Depreciation on right-of-use assets

(863,011)

-

-

-

(863,011)

Loss on disposal of assets

-

-

(395)

-

(395)

Total as at 30 June 2020

2,322,076

809,800

24,519

-

3,156,396

Net book value as at 30 June 2020 represented by

Gross book value

3,185,087

1,457,481

61,510

24,505

4,728,584

Accumulated depreciation, amortisation and impairment

(863,011)

(647,681)

(36,991)

(24,505)

(1,572,188)

Total as at 30 June 2020

2,322,076

809,800

24,519

-

3,156,396

Carrying amount of right-of-use assets

2,322,076

-

-

-

2,322,076

No indicators of impairment were found for property plant and equipment.

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

There are no significant contractual commitments for the acquisition of property, plant and equipment and intangible assets.

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 $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 the Commission where there exists an obligation to restore the property to its original condition. These costs are included in improvements with a corresponding provision for the ‘make good’ recognised.

Leased Right-of-Use (ROU) Assets

Leased ROU assets are capitalised at the commencement date of the lease and comprise the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted by the Commission as separate asset classes to corresponding assets owned outright.

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. Leased ROU assets continue to be measured at cost after initial recognition in the Commission's 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 in June 2020. 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 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

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:

2020

2019

Buildings - Right of use asset

4 years

-

Leasehold improvements

Lease terms

Lease term

Plant and equipment

3 to 4 years

3 to 4 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 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.

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 Commission 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.

Accounting Policy (continued)

Intangibles

The Commission's intangibles comprise software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

The Commission's software assets were fully depreciated at year end.