meteorological service of new zealand ltd
Annual Report 2013
Financial
Statements
30
Notes to the Financial Statements
for the year ended 30 June 2013 (cont.)
Goodwill is tested annually for impairment and carried at cost less
accumulated impairment losses. Impairment losses on goodwill
recognised in the Statements of Comprehensive Income are not
reversed. Gains and losses on the disposal of a CGU or portion of a
CGU include the carrying amount of goodwill relating to the CGU or
portion of a CGU sold.
Intangible assets acquired separately
Intangible assets acquired separately are reported at cost less
accumulated amortisation and accumulated impairment losses.
Amortisation is charged on a straight-line basis over their estimated
useful lives of between three and five years. The estimated useful life
and amortisation method are reviewed at the end of each annual
reporting period, with the effect of any changes in estimate being
accounted for on a prospective basis.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are identified
and recognised separately from goodwill where they satisfy the
definition of an intangible asset and their fair values can be
measured reliably. The cost of such intangible assets is their fair
value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same
basis as intangible assets acquired separately.
Internally-generated intangible assets – computer software
Costs associated with maintaining computer software programmes
are recognised as an expense as incurred.
An internally-generated intangible asset arising from development
(
or from the development phase of an internal project) is recognised
if, and only if all of the following have been demonstrated:
•
the technical feasibility of completing the intangible asset so that
it will be available for use or sale;
•
the intention to complete the intangible asset and use or sell it;
•
the ability to use or sell the intangible asset;
•
how the intangible asset will generate probable future
economic benefits;
•
the availability of adequate technical, financial and other resources
to complete the development and to use or sell the intangible
asset; and
•
the ability to measure reliably the expenditure attributable to the
intangible asset during its development.
The amount initially recognised for internally-generated intangible
assets is the sum of the expenditure incurred from the date when
the intangible asset first meets the recognition criteria listed above.
Where no internally-generated intangible asset can be recognised,
development expenditure is charged to the Statements of
Comprehensive Income in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible
assets are reported at cost less accumulated amortisation and
accumulated impairment losses, on the same basis as intangible
assets acquired separately.
The annual amortisation rate shown below is considered appropriate
for each classification of intangible asset:
Internally Generated Software
20.0 – 33.0%
Customer Base
20%
Leases
Operating lease payments, where lessors retain substantially all the
risk or benefit of ownership of the leased items, are recognised as an
expense in the Statements of Comprehensive Income on a
straight-line basis over the period of the lease.
In the event that lease incentives are received to enter into operating
leases, such incentives are recognised as a liability. The aggregate
benefit of incentives is recognised as a reduction 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 are consumed.
Provisions
Provisions are recognised when the Group has a present obligation
(
legal or constructive) as a result of a past event and it is probable
that the Group will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the balance
sheet date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using
the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable
can be measured reliably.
Restoration provision
Restoration costs include the dismantling and demolition of
infrastructure and the removal of residual materials and remediation
of disturbed areas. The restoration costs are based on
management’s best estimate of the amount required to settle the
obligation. Movements in the restoration provision are recognised in
the Statements of Comprehensive Income.
Employee benefits
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits,
annual leave, long service leave and alternative days leave expected
to be settled within 12 months of the reporting date are recognised
in payables in respect of employees’ service up to the reporting date
and are measured at the amounts expected to be paid when it is
probable that the liabilities will be settled.
Termination leave
The liability for termination leave not expected to be settled within
12
months of the reporting date is recognised in non current
liabilities and measured as the present value of expected future
payments to be made in respect of services provided by employees
up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the reporting
date on national government bonds with terms to maturity and
currency that match, as closely as possible, the estimated future
cash outflows.
