DEPARTMENT OF FISHERIES ANNUAL REPORT TO THE ...

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DISCLOSURES AND LEgAL COMPLIANCE � NOTES TO THE FINANCIAL STATEMENTS For items of property, plant and equipment and infrastructure acquired at no cost or for nominal consideration, the cost is their fair value at the date of acquisition. Subsequent measurement Subsequent to initial recognition as an asset, the revaluation model is used for the measurement of land, buildings and infrastructure and the cost model for all other property, plant and equipment. Land, buildings and infrastructure are carried at fair value less accumulated depreciation (buildings and infrastructure only) and accumulated impairment losses. All other items of property, plant and equipment are carried at historical cost less accumulated depreciation and accumulated impairment losses. Where market-based evidence is available, the fair value of land and buildings is determined on the basis of current market buying values determined by reference to recent market transactions. When buildings are revalued by reference to recent market transactions, the accumulated depreciation is eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount. In the absence of market-based evidence, the fair value of land and buildings is determined on the basis of existing use. This normally applies where buildings are specialised or where land use is restricted. Fair value for existing use assets is determined by reference to the cost of replacing the remaining future economic benefits embodied in the asset, ie. the depreciated replacement cost. Where the fair value of buildings is dependent on using the depreciated replacement cost basis, the gross carrying amount and the accumulated depreciation are restated proportionately. Independent valuations of land and buildings are provided annually by the Western Australian Land Information Authority (Valuation Services) and recognised annually to ensure that the carrying amount does not differ materially from the asset’s fair value at the end of the reporting period. Fair value of major boating assets has been determined on the basis of current market buying values determined by reference to recent market transactions. Where no market based evidence is available, due to the specialised nature of some of these assets, fair value has been determined by reference to the depreciated replacement cost (existing use basis). Independent valuations are obtained every 3 to 5 years. When major boating assets are revalued, the accumulated depreciation is eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount. The most significant assumptions in estimating fair value are made in assessing whether to apply the existing use basis to assets and in determining estimated useful life. Professional judgment by the valuer is required where the evidence does not provide a clear distinction between market type assets and existing use assets. Refer to note 23 ‘Property, plant and Equipment’ for further information on revaluations. Derecognition Upon disposal or derecognition of an item of property, plant and equipment and infrastructure, any revaluation reserve relating to that asset is retained in the asset revaluation surplus. Asset Revaluation Surplus The asset revaluation surplus is used to record increments and decrements on the revaluation of non-current assets as described in Note 23 “Property, Plant and Equipment”. 117 Depreciation All non-current assets having a limited useful life are systematically depreciated over their estimated useful lives in a manner that reflects the consumption of their future economic benefits. Land is not depreciated. Depreciation on other assets is calculated using the straight line method, using rates which are reviewed annually. As a result of moving to the shared services environment, the Department has adopted the whole of government depreciation rates as determined by the Department of Treasury. Estimated useful lives for each class of depreciable asset are: Asset category life (years) Buildings 40 Vessels 5-6 Communication equipment 5 Computer equipment 3 Furniture and fittings 10 Infrastructure 30 Motor vehicles 5 Office equipment 5 Other equipment 5-10 Plant and equipment 5-20 Works of Art controlled by the Department are classified as property, plant and equipment. They are anticipated to have very long and indefinite useful lives. Their service potential has not, in any material sense, been consumed during the reporting period and so no depreciation has been recognised. Land is not depreciated. (h) Intangible Assets Capitalisation/Expensing of assets Acquisitions of intangible assets costing $5,000 or more and internally generated intangible assets costing $50,000 or more are capitalised. The cost of utilising the assets is expensed (amortised) over their useful life. Costs incurred below these thresholds are immediately expensed directly to the Statement of Comprehensive Income. All acquired and internally developed intangible assets are initially recognised at cost. For assets acquired at no cost or for nominal cost, the cost is their fair value at the date of acquisition. The cost model is applied for subsequent measurement requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation for intangible assets with finite useful lives is calculated for the period of the expected benefit (estimated useful life) on the straight line basis using rates which are reviewed annually. All intangible assets controlled by the Department have a finite useful life and zero residual value. The expected useful lives for each class of intangible asset are:
DISCLOSURES AND LEgAL COMPLIANCE � NOTES TO THE FINANCIAL STATEMENTS Licences up to 10 years Development Costs 3 to 5 years Software(a) 3 to 5 years Web site costs 3 to 5 years (a) Software that is not integral to the operation of any related hardware. Licences Licences have a finite useful life and are carried at cost less accumulated amortisation and accumulated impairment losses. Research and Development Research costs are expensed as incurred. Development costs incurred for an individual project are carried forward when the future recoverability can reasonably be regarded as assured and the total project costs are likely to exceed $50,000. Other development costs are expensed as incurred. Computer Software Software that is an integral part of the related hardware is treated as property, plant and equipment. Software that is not an integral part of the related hardware is treated as an intangible asset. Software costing less than $5,000 is expensed in the year of acquisition. Website costs Website costs are charged as expenses when they are incurred unless they relate to the acquisition or development of an asset when they may be capitalised and amortised. Generally, costs in relation to feasibility studies during the planning phase of a web site, and ongoing costs of maintenance during the operating phase are expensed. Costs incurred in building or enhancing a website, to the extent that they represent probable future economic benefits that can be reliably measured, are capitalised. (i) Impairment of Assets Property, plant, equipment and infrastructure are tested for any indication of impairment at the end of each reporting period. Where there is an indication of impairment, the recoverable amount is estimated. Where the recoverable amount is less than the carrying amount, the asset is considered impaired and is written down to the recoverable amount and an impairment loss is recognised. As the Department is a not-for-profit entity, unless an asset has been identified as a surplus asset, the recoverable amount is the higher of an asset’s fair value less costs to sell and depreciated replacement cost. The risk of impairment is generally limited to circumstances where an asset’s depreciation is materially understated, where the replacement cost is falling or where there is a significant change in useful life. Each relevant class of assets is reviewed annually to verify that the accumulated depreciation/amortisation reflects the level of consumption or expiration of asset’s future economic benefits and to evaluate any impairment risk from falling replacement costs. The recoverable amount of assets identified as surplus assets is the higher of fair value less costs to sell and the present value of future cash flows expected to be derived from the asset. Surplus assets carried at fair value have no risk of material impairment where fair value is determined by reference to market-based evidence. Where fair value is determined by reference to depreciated replacement cost, surplus assets are at risk of impairment and the recoverable amount is measured. Surplus assets at cost are tested for indications of impairment at the end of each reporting period. (j) Non-current assets (or disposal groups) classified as held for sale The department does not have any assets classified as held for sale. 118 (k) leases Finance lease rights and obligations are initially recognised at the commencement of the lease term as assets and liabilities equal in amount to the fair value of the leased item or, if lower, the present value of the minimum lease payments, determined at the inception if the lease. The assets are disclosed as plant, equipment and vehicles under lease, and are depreciated over the period during which the Department is expected to benefit from their use. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding lease liability, according to the interest rate implicit in the lease. The Department holds operating leases for its head office and a number of branch office buildings. Lease payments are expensed on a straight line basis over the lease term as this represents the pattern of benefits derived from the leased properties. (l) financial Instruments In addition to cash, the Department has two categories of financial instrument: • Loans and receivables; and • Financial liabilities measured at amortised cost. These have been disaggregated into the following classes: Financial Assets • Cash and cash equivalents • Restricted cash and cash equivalents • Receivables • Amounts receivable for services Financial Liabilities • Payables • WATC borrowings • Finance lease liabilities Initial recognition and measurement of financial instruments is at fair value that normally equates to the transaction cost or the face value. Subsequent measurement is at amortised cost using the effective interest method. The fair value of short-term receivables and payables is the transaction cost or the face value because there is no interest rate applicable and subsequent measurement is not required as the effect of discounting is not material. (m) cash and cash equivalents For the purpose of the Statement of Cash Flows, cash and cash equivalent (and restricted cash and cash equivalent) assets comprise cash on hand and short-term deposits with original maturities of three months or less that are readily convertible to a known amount of cash and which are subject to insignificant risk of changes in value. (n) Accrued Salaries Accrued salaries (refer note 29 ‘Other liabilities’) represent the amount due to staff but unpaid at the end of the financial year, as the pay date for the last pay period for that financial year does not coincide with the end of the financial year. Accrued salaries are settled within a fortnight of the financial year end. The Department considers the carrying amount of accrued salaries to be equivalent to its net fair value.
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DEPARTMENT OF FISHERIES ANNUAL REPO
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fishery South Coast Bioregion South
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SUMMARy OF THE yEAR � FISH PIES (
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Key compliance statistics - 2008/09
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