Annual Report 2009 (PDF 2 MB) - Wellington Institute of Technology

Impairment of AssetsAt each reporting date, Wellington Institute of Technology reviews the carrying amounts of its tangible and intangibleassets to determine whether there is any indication that those assets have suffered an impairment loss. If any suchindication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairmentloss (if any). Where the asset does not generate cash flows that are independent from other assets, the recoverableamount from the cash-generating unit to which the asset belongs is estimated.Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, theestimated future cash flows are discounted to their present value, using a discount rate that reflects current marketassessments of the time value of money.FINANCIAL STATEMENTSAn impairment loss is recognised in the income statement, unless the relevant asset has a revaluation reservebalance, in which case the revaluation reserve is decreased by the appropriate amount.Intangible AssetsCourse development costsDevelopment costs for new courses internally developed or acquired which have a benefit of more than 1 year havebeen capitalised. Such costs are expected to be recovered, and are amortised on a straight-line basis over theperiod of their expected useful lives, being 3 years.SoftwareAll software purchased or created by Wellington Institute of Technology which have a benefit of more than 1 yearhave been capitalised. Such costs are expected to be recovered, and are amortised on a straight-line basis over theperiod of their expected useful lives, being 3 years.Assets under constructionCourse development and software assets under construction are treated as an intangible asset until completion.Upon completion of a project, the total cost is transferred to the appropriate asset class, at which point amortisationbegins.Interest-Bearing Loans and BorrowingAll loans and borrowings are initially recognised at cost, being the fair value of the consideration received net oftransaction costs associated with the borrowing.After initial recognition, interest-bearing loans and borrowings are measured at amortised cost using the effectiveinterest method. Amortised cost is calculated taking into account any transaction costs, and any discount orpremium on settlement.Gains and losses are recognised in the income statement when the liabilities are de-recognised, as well as throughthe amortisation process.InventoriesInventories available for resale are valued at the lower of cost and net realisable value. Consumables are recorded atcost.InvestmentsInvestments are initially recognised at cost, being the fair value of the consideration given. After the initial recognition,investments which are classified as available-for-sale are measured at fair value. Investments that are intended to beheld-to-maturity are subsequently measured at amortised cost using the effective interest method. Amortised cost iscalculated by taking into account any discount or premium on acquisition, over the period to maturity. Any changesin fair value throughout the term of the investment are recognised within the Income Statement.30WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT