This section analyses the Corporation’s assets used to conduct its operations and the operating liabilities incurred as a result. Employee related information is disclosed in Note 3, People and relationships.

2.1 Financial Assets

2.1A Cash and cash equivalents

2.1B Trade and other receivables

(i) The majority of goods and services receivables relate to advertising agencies. All trade and other receivables are expected to be recovered within 12 months. Credit terms were 45 days for advertising (2018: 45 days) and 30 days for all other trade receivables (2018: 30 days).

Accounting Policy

Financial assets

Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

2.1C Term investments

All term deposits are expected to be recovered within 12 months (2018: 12 months).

The Corporation has a series of investments with banks. The investments are made under Section 59(1)(b) of the PGPA Act. The Corporation’s investments have Standard & Poor’s credit ratings of BBB+ or higher, and are not deemed to be impaired.

2.2 Non-Financial Assets

2.2A Reconciliation of the opening and closing balances of property, plant and equipment and intangibles

1. The carrying amount of computer software included $4.54m of purchased software (2018: $4.00m) and $7.99m of internally generated software (2018: $9.59m).

2. Goodwill is not amortised, but is assessed annually for impairment (based on its “fair value” or "value in use" calculated using the net present value of estimated future net cash inflows of the cash-generating unit (CGU) to which it has been allocated). In the current and prior financial year, the amount of goodwill recognised was reviewed, using estimated cash inflows assuming a risk adjusted pre-tax discount rate of 14.5%.

There were no indicators of impairment for any other intangible assets as at 30 June 2019.

No intangible assets or land and buildings 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 4.2.

In the current year and prior year, an independent valuer conducted a revaluation of Land and Buildings.

Contractual commitments for the acquisition of property, plant, equipment and other intangibles

At 30 June 2019, the Corporation had a total contractual commitment of $3.013m (2018: $1.446m) for the acquisition of television and radio broadcasting equipment, and building improvements.

The Corporation has contractual commitments of $0.008m (2018: $0.128m) for the acquisition of intangible assets.

Accounting Policy

Acquisition of assets

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 Corporation where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Corporation's leasehold improvements with a corresponding provision for the ‘make good’ recognised at net present value. The increase in the net present value through the passage of time, or "unwinding of the discounted value", is recognised as a finance cost. Refer Note 2.3B.

Revaluations

Following initial recognition at cost, property, plant and equipment are carried at 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.

Revaluation decrements for a class of assets are recognised directly in the Statement of Comprehensive Income surplus except to the extent that they reversed a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date was eliminated against the gross carrying amount of the asset and the asset was restated to the revalued amount.

"Make good" under revaluation model

Changes in "make good" provisions under the revaluation model are the reverse of revaluations of the related asset, the only difference being the account affected (asset or provision).

A decrease in the provision for "make good" (similar to a revaluation increase of the related asset) is credited to asset revaluation reserve unless it reverses a previous increase which was recognised in Statement of Comprehensive Income.

Fair value measurement

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Corporation 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:

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in the reconciliation of the opening and closing balances of property, plant and equipment and intangibles of this note.

Leasehold improvements are amortised on a straight line basis over the shorter of either the unexpired period of the lease or the estimated useful life of the improvements.

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.

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 Corporation's intangibles comprise purchased and internally developed software for internal use, goodwill and trademark. 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. All software assets were assessed for indications of impairment as at 30 June 2019. The useful lives of the Corporation's software are 5 to 7 years (2018: 5 to 7 years).

Goodwill

Goodwill is recognised on the purchase of a business unit in accordance with AASB 3 "Business Combinations". Goodwill is tested for impairment annually.

Contract rights and trademark

Contract rights are amortised over their anticipated useful lives (6 years). The trademark is not amortised as it has an indefinite useful life, but is tested for impairment annually.

2.2B Program inventories

(i) Program inventory balances are the net of cost less accumulated amortisation and impairment. During the current financial year, $59.972m was recognised as amortisation expense (2018: $54.243m), including the impaired program write off below.

(ii) A review of programs and amortisation is undertaken annually, which resulted in an amount of $5.544m being written off during the year ended 30 June 2019 (2018: $4.742m).

Accounting Policy

Program costs are capitalised as inventory and amortised over time to reflect their expected usage.

Program acquisitions

Program acquisitions are amortised on a straight line basis over the shorter of three years or licence period (for movies), or over the shorter period of two years or licence period (for documentaries and other overseas purchased programs).

Commissioned programs

Commissioned programs are valued at cost and amortised on a straight line basis over the shorter of three years or licence period.

Some programs are fully amortised in the current period. All internally produced news and current affairs programs, as well as sports events, are expensed immediately at the time the expense is incurred.

2.2C Other non-financial assets

(i) Amortisation for prepaid programs commences once the licence period starts. As at 30 June of each year the licence period for these prepaid programs had not commenced.

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

2.3 Payables

2.3A Trade creditors and accruals

(i) Trade creditors and accruals settlement was usually made within 30 days.

(ii) The Corporation received funds from Government for providing broadcasting. An amount is payable to the Government for program work which has come to an end.

2.3B Other provisions

The Corporation currently has an agreement for the leasing of premises at Federation Square Melbourne which has provisions requiring the Corporation to restore ("make good") the premises to its original condition at the conclusion of the lease. The amount settled during the year relates to “make good” costs incurred on surrender of a floor of the Federation Square leased premises.