Annual Report - Northern Health

Note 1: Summary of Significant Accounting PoliciesFinance LeasesEntity as lessorNorthern Health does not hold any finance leases arrangements with other parties.Notes To and Forming Part of the Financial StatementsNorthern Health Annual Report 2011/2012Entity as lesseeFinance leases are recognised as assets and liabilities at amounts equal to the fair value of the lease property or, if lower, the present value of the minimum lease payment, each determined at theinception of the lease. The lease asset is depreciated over the shorter of the estimated useful life of the asset or the term of the lease. Minimum lease payments are allocated between the principalcomponent of the lease liability, and the interest expense calculated using the interest rate implicit in the lease, and charged directly to the comprehensive operating statement.Operating LeasesRental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.Operating lease payments, including any contingent rentals, are recognised as an expense in the operating statement on a straight line basis over the lease term, except where another systematic basisis more representative of the time pattern of the benefits derived from the use of the leased asset.Lease incentivesAll incentives for the agreement of a new or renewed operating lease are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive'snature or form or the timing of the payments.In the event that lease incentives are received by the lessee to enter into operating leases, such incentives are recognised as a liability. The aggregate benefits of incentives are recognised as areduction of rental expense on a straight line basis except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished.Leasehold improvementsThe cost of leasehold improvements are capitalised as an asset and depreciated over the remaining term of the lease or the estimated useful life of the improvements, whichever is the shorter.(m) ReservesContributed CapitalConsistent with Australian Accounting Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities and FRD 119 Contributions by Owners , appropriations for additions tothe net asset base have been designated as contributed capital. Other transfers that are in the nature of contributions or distributions that have been designated as contributed capital are also treatedas contributed capital.Property, Plant & Equipment Revaluation SurplusThe asset revaluation surplus is used to record increments and decrements on the revaluation of non-current physical assets.Specific Restricted Purpose ReserveA specific restricted purpose reserve is established where the entity has possession or title to the funds but has no discretion to amend or vary the restriction and/or condition underlying the fundsreceived.(n) CommitmentsCommitments for future expenditure include operating and capital commitments arising from contracts. Commitments are disclosed by way of a note at their nominal value and are inclusive of the GSTpayable. In addition, where it is considered appropriate and provides additional relevant information to users, the net present values of significant individual projects are stated. These futureexpenditures cease to be disclosed as commitments once the related liabilities are recognised on the balance sheet.(o) Contingent assets and contingent liabilitiesContingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of note and if quantifiable, are measured at nominal value. Contingent assets andcontingent liabilities are presented inclusive of the GST receivable or payable respectively.Northern Health Financial Report Appendix to the 2011 - 2012 Annual Report Page 16 of 60