ANNUAL REPORT 2021-22
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ANNUAL REPORT 2021-22
ANNUAL REPORT 2021-22
Capital work in progress (CWIP) represents assets which are
under construction/development and have not been completed
for their intended use. As such, CWIP is recognised in the
balance sheet as an asset but is not depreciated. Once the
assets have been completed and are available for intended use,
they will be capitalised to one of the above asset classes and
depreciation will commence.
Where an asset is acquired at no cost or for nominal value, the
cost is recorded at fair value as at the acquisition date.
(k) Leases
Right of use assets
Corporation as a lessee:
The Corporation leases office buildings and motor vehicles.
Lease contracts are typically made for fixed periods of 4 to
10 years, but may have extension options. Lease terms are
negotiated on an individual basis and contain a wide range
of different terms and conditions. The lease agreements do
not impose any covenants. The Corporation does not provide
residual value guarantees in relation to leases.
The Corporation has elected to recognise payments for short-term
leases and low value leases as expenses on a straight-line basis,
instead of recognising a right-of-use asset and lease liability. Short-
term leases are leases with a lease term of 12 months or less
with no purchase option. Low value assets are assets with a fair
value of $10,000 or less when new and not subject to a sublease
arrangement comprising mainly of photocopiers.
Recognition and measurement
The Corporation assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract conveys
the right to control the use of an identified asset for a period of
time in exchange for consideration.
The Corporation recognises lease liabilities to make lease
payments and right-of-use assets representing the right to use
the underlying assets, except for short-term leases and leases of
low-value assets.
The Corporation recognises right-of-use assets at the
commencement date of the lease (the date the underlying asset
is available for use). Right-of-use assets are initially measured at
the amount of initial measurement of the lease liability, adjusted
by any lease payments made at or before the commencement
date and lease incentives, any initial direct costs incurred,
and estimated costs of dismantling and removing the asset or
restoring the site, if any.
Right-of-use assets are amortised on a straight-line basis over
the shorter of the lease term and the estimated useful lives of
the assets, as follows:
Asset class
Buildings
Motor vehicles
Effective life
5 to 10 years
4 to 7 years
If ownership of the leased asset transfers to the Corporation at
the end of the lease term or the cost reflects the exercise of a
purchase option, amortisation is calculated using the estimated
useful life of the asset.
The right-of-use assets are subsequently measured at fair value
which approximates costs except for those arising from leases
that have significantly below-market terms and conditions
principally to enable the Corporation to further its objectives
and are also subject to impairment.
The right-of-use assets are subject to remeasurement principles
consistent with the lease liability including indexation and
market rent review that approximates fair value and only
revalued where a trigger or event may indicate their carrying
amount does not equal fair value.
Lease liabilities
At the commencement date of the lease where the Corporation
is the lessee, the Corporation recognises lease liabilities
measured at the present value of lease payments to be
made over the lease term. Lease payments may include fixed
payments (including in substance fixed payments) less any lease
incentives receivable and payments of penalties for terminating
the lease, if the lease term reflects the entity exercising the
option to terminate.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for the Corporation's leases, the
weighted average incremental borrowing rate is used as the
incremental borrowing rate.
After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for the
lease payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change in
the lease term, a change in the lease payments (such as changes
to future payments resulting from a change in an index or rate
used to determine such lease payments) or a change in the
assessment of an option to purchase the underlying asset.
(I) Intangible assets
Intangible assets acquired as part of a business combination,
other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately
are initially recognised at cost. Indefinite life intangible assets
are not amortised and are subsequently measured at cost less
any impairment. Finite life intangible assets are subsequently
measured at cost less amortisation and any impairment.
The gains or losses recognised in profit or loss arising from
the derecognition of intangible assets are measured as the
difference between net disposal proceeds and the carrying
amount of the intangible asset. The amortisation method and
useful lives of finite life intangible assets are reviewed annually.
Changes in the expected pattern of consumption or useful life
are accounted for prospectively by changing the amortisation
method or period.
Software
Significant costs associated with software are amortised on a
straight-line basis over their estimated useful lives. Subsequent
expenditure is capitalised only when it increases the future
economic benefits embodied in the specific asset to which it
relates. Software has a useful life of 2-10 years.
(m) Impairment of non-financial assets
At each reporting date, the Corporation reviews the carrying
amounts of its non-financial assets to determine whether there
is any indication of impairment. If any such indication exists,
then the asset's recoverable amount is estimated.
For impairment testing, assets are grouped together into the
smallest of assets that generates cash inflows from
group
continuing use that are largely independent of the cash inflows
of other assets or cash-generating units (CGUS). For Territory
Generation each region is not connected and therefore meets
the criteria to be identified as a separate CGU.
The recoverable amount of an asset or CGU is the greater of its
value-in-use and its fair value less costs to sell.
An impairment loss is recognised if the carrying amount of an
asset or CGU exceeds its recoverable amount. Impairment losses
are recognised in profit or loss. They are allocated first to reduce
the carrying amount of any goodwill (if applicable), and then to
reduce the carrying amounts of the other assets in the CGU on a
pro rata basis.
An impairment loss in respect of goodwill is not reversed. For
other assets, an impairment loss is reversed only to the extent
that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
(n) Trade and other payables
These amounts represent liabilities for goods and services
provided to the Corporation prior to the end of the financial
year and which are unpaid. Due to their short-term nature they
are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of
recognition.
(o) Borrowings
Loans and borrowings are initially recognised at the fair value
of the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective
interest method.
Where the Corporation has the discretion to refinance or roll
over an obligation for at least 12 months after the reporting
date, the loans or borrowings are classified as non-current.
(p) Finance costs
Finance costs attributable to qualifying assets are capitalised
as part of the asset. All other finance costs are expensed in the
period in which they are incurred, including:
interest on bank overdrafts
interest on short-term and long-term borrowings
•
interest on finance leases
•
unwinding of discounts on provisions.
(q) Provisions
Provisions are recognised when the Corporation has a present
(legal or constructive) obligation as a result of a past event,
it is probable the Corporation will be required to settle the
obligation, and a reliable estimate can be made of the amount
of the obligation. The amount recognised as a provision is the
best estimate of the consideration required to settle the present
obligation at the reporting date, taking into account the risks
and uncertainties surrounding the obligation. If the time value
of money is material, provisions are discounted using a current
pre-tax rate specific to the liability. The increase in the provision
resulting from the passage of time is recognised as a finance cost.
Decommissioning
A decommissioning provision is raised when there is the
existence of a present obligation that can be reliably measured.
Reliable measurement is taken at the point a reasonable
expectation of the remaining useful life of the asset can be
determined. The provision is measured as the present value of
expected future payments. The expected future payments are
discounted to present value using an appropriate discount rate.
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