Wreck Bay Aboriginal Community Council

ABN: 62 564 797 956

Notes to and forming part of the financial statements

for the period ended 30 June 2020

2.2B:Accounting Policy

Assets are recorded at cost on acquisition except as

Any accumulated depreciation as at the revaluation date is

stated below. The cost of acquisition includes the fair value

eliminated against the gross carrying amount of the asset

of assets transferred in exchange and liabilities undertaken.

and the asset restated to the revalued amount.

Financial assets are initially measured at their fair value

plus transaction costs where appropriate.

Depreciation

Depreciable property, plant and equipment assets are

Assets acquired at no cost, or for nominal consideration,

written-off to their estimated residual values over their

are initially recognised as assets and income at their fair

estimated useful lives to Council, using in all cases, the

value at the date of acquisition.

straight line method of depreciation. Leasehold improvements

are amortised on a straight-line basis over the lesser of the

Asset Recognition Threshold

estimated useful life of the improvements of the unexpired

Purchases of property, plant and equipment are recognised

period of the lease.

initially at cost in the statement of financial position, except

for purchases costing less than $500, which are expensed

Depreciation rates (useful lives), residual values and

in the year of acquisition (other than where they form part

methods are reviewed at each reporting date and

of a group of similar items which are significant in total).

necessary adjustments are recognised in the current and

future reporting periods, as appropriate.

Lease Right of Use (ROU) Assets

Leased ROU assets are capitalised at the commencement

Depreciation rates applying to each class of depreciable

date of the lease and comprise of the initial lease liability

asset are based on the following useful lives:

amount, initial direct costs incurred when entering into the

lease less any lease incentives received. These assets are

2019

2018

accounted for by Commonwealth lessees as separate asset

Building on

classes to corresponding assets owned outright, but

Freehold Land

40 Years

40 Years

included in the same column as where the corresponding

Leasehold

underlying assets would be presented if they were owned.

Improvements

10 to 40 Years

10 to 40 Years

Plant and

Revaluations

Equipment

3 to 10 years

3 to 10 Years

Following intial recognition at cost, property, plant and

equipment (excluding ROU assets) are carried at fair value

The depreciation rates for the ROU assets are based on

less subsequent accumulated depreciation and accumulated

the commencement date to the earlier of the end of the

impairment losses. Valuations are conducted with sufficient

useful life of the ROU asset or the end of the lease term.

frequency to ensure that the carrying amounts of assets did

not differ materially from the assets' fair values as at the

Impairment

reporting date. The regularity of independent valuations

All assets were assessed for impairment at 30 June 2020.

depended upon the volatility of movements in market values

Where indications of impairment exist, the asset's

for the relevant assets.

recoverable amount is estimated and an impairment

adjustment made if the asset's recoverable amount is

Revaluation adjustments are made on a class basis. Any

less than its carrying amount.

revaluation increment is credited to equity under the heading

of asset revaluation reserve except to the extent that it

The recoverable amount of an asset is the higher of its fair

reversed a previous revaluation decrement of the same asset

value less costs of disposal and its value in use. Value in

class that was previously recognised in the surplus/deficit.

use is the present value of the future cash flows expected

Revaluation decrements for a class of assets are recognised

to be derived from the asset. Where the future economic

directly in the surplus/deficit except to the extend that they

reverse a previous revaluation increment for that class.

benefit of an asset is not primarily dependent on the

Derecognition

asset's ability to generate future cash flows, and the

An item of property, plant and equipment is derecognised

asset would be replaced if the Council were deprived of the

upon disposal or when no further future economic benefits

asset, its value in use is taken to be its depreciated

are expected from its use or disposal.

replacement cost.