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

Leased AssetsInitial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset.Operating lease payments, where the lessor effectively retains substantially all the risks and rewards of ownership ofthe leased items, are recognised as an expense on a straight-line basis over the lease term.PayablesTrade payables and other accounts payable are recognised when Wellington Institute of Technology becomesobliged to make future payments resulting from the purchase of goods and services.Property, Plant and EquipmentLand and buildingsCrown-owned land and buildings are included as part of Wellington Institute of Technology’s property,plant andequipment. Although legal title has not been transferred, the Crown has vested all the normal risks and rewards ofownership to Wellington Institute of Technology. Restrictions on disposal of these Crown owned land and buildingsare in place, as per section 192 of the Education Act 1989.Land and buildings are measured at fair value. Fair value is determined on the basis of an annual independentvaluation prepared by registered valuers. Land values are based on discounted cash flows or capitalisation of netincome (as appropriate). Buildings are valued based on depreciated replacement cost. This methodology is anacceptable estimate of fair value due to the lack of market-based evidence for education delivery purposes.FINANCIAL STATEMENTSAny revaluation increase arising on the revaluation of land and buildings is credited to the appropriate revaluationreserve, except to the extent that it reverses a revaluation decrease for the same asset previously recorded as anexpense in the income statement, in which case the increase is credited to the income statement to the extent ofthe decrease previously charged. A decrease in carrying amount arising on the revaluation of land and buildings ischarged as an expense in the income statement to the extent that it exceeds the balance, if any, held in the assetrevaluation reserve.EquipmentEquipment is measured at fair value. Fair value is determined on the basis of a 3 yearly independent valuationprepared by registered valuers based on discounted cash flows every three years.Any revaluation increase arising on the revaluation of equipment is credited to the appropriate revaluation reserve,except to the extent that it reverses a revaluation decrease for the same asset previously recorded as an expense inthe income statement, in which case the increase is credited to the income statement to the extent of the decreasepreviously charged. A decrease in carrying amount arising on the revaluation of equipment is charged as an expensein the income statement to the extent that it exceeds the balance, if any, held in the asset revaluation reserve.Other property, plant and equipmentAll other property, plant and equipment is stated at cost less accumulated depreciation and impairment. Costincludes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or partof the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future totheir present value as at the date of the acquisition.Assets under constructionAssets under construction are disclosed separately. Upon completion, the asset’s total cost is transferred to theappropriate asset class, at which point depreciation begins.WELLINGTON INSTITUTE OF TECHNOLOGY | 2009 ANNUAL REPORT31