Financial
Statements
29
meteorological service of new zealand ltd
Annual Report 2013
Revenue
Revenue is measured at the fair value for the sale of goods and
services. Revenue is reduced for estimated customer returns, rebates
and other similar allowances.
Rendering of services
Revenue from a contract to provide services is recognised by
reference to the stage of completion of the contract. The stage of
completion of the contract is determined as follows:
•
installation fees are recognised by reference to the stage of
completion of the installation, determined as the proportion of
the total time expected to install that has elapsed at the balance
sheet date;
•
servicing fees included in the price of products sold are
recognised by reference to the proportion of the total cost of
providing the servicing for the product sold, taking into account
historical trends in the number of services actually provided on
past goods sold; and
•
revenue from time and material contracts is recognised at the
contractual rates as labour hours are delivered and direct
expenses are incurred.
Interest income
Interest income is accounted for using the effective interest rate
method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction
costs incurred. Borrowings are subsequently carried at amortised
cost; any difference between the proceeds (net of transaction costs)
and the redemption value is recognised in the income statement
over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee
is deferred until the draw-down occurs. To the extent there is no
evidence that it is probable that some or all of the facility will be drawn
down, the fee is capitalised as a pre-payment for liquidity services
and amortised over the period of the facility to which it relates.
Government grants
Government grants are not recognised until there is reasonable
assurance that the Group will comply with the conditions attaching
to them and that the grants will be received.
Government grants relating to assets are treated as deferred income
and recognised in the Statements of Comprehensive Income over
the expected useful lives of the assets concerned.
Inventories
Inventories are valued at the lower of cost, on a weighted average
cost basis of inventory on hand calculated at the time of the last
purchase, and net realisable value. Net realisable value represents
the estimated selling price for inventories less costs necessary to
make the sale.
Property, plant and equipment
The cost of purchased property, plant and equipment is valued at
the consideration given to acquire the assets and the value of other
directly attributable costs which have been incurred in bringing the
assets to the location and condition necessary for the intended
service. Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses.
The costs of assets constructed by the Parent and Group include the
costs of all materials used in construction and direct labour on the
project. Costs are capitalised as soon as the asset is capable of
productive use.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Parent and Group and the cost of the item can be
measured reliably. All other repairs and maintenance are charged
to the Statements of Comprehensive Income during the financial
period in which they are incurred.
Depreciation
Depreciation of property, plant and equipment, other than freehold
land, is calculated using the straight-line method to allocate the
historical cost over the estimated useful life of the asset, after due
allowance has been made for the expected residual value.
The cost of improvements to leasehold property are capitalised,
disclosed as leasehold property and amortised over the unexpired
period of the lease, or the estimated useful life of the improvements,
whichever is shorter.
The annual depreciation rates are shown below for each
classification of asset:
Buildings
2.5% – 10.0%
Computer Hardware & Software Equipment
10.0% – 33.3%
Furniture & Fittings
10.0% – 33.3%
Buildings on Leasehold Land
3.1% – 5.0%
Meteorological Equipment
2.0% – 33.0%
Motor Vehicles
15.0% – 20.0%
Office Equipment
20.0% – 33.0%
Plant & Equipment
10.0% – 33.0%
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount of the asset and are recognised
in the Statements of Comprehensive Income.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the
fair value of the Group’s share of the net identifiable assets of the
acquired jointly controlled entity at the date of acquisition. Goodwill
is allocated to cash-generating units for the purpose of impairment
testing. The allocation is made to those cash-generating units
(‘
CGU’) or groups of cash-generating units that are expected to
benefit from the business combination in which the goodwill arose
identified according to operating segment.
