30 NOVEMBER NEW ZEALAND GAZETTE 3827

(ii) Foreign currencies

Assets and liabilities denominated in a foreign currency are translated at the rates of exchange ruling at balance date. Exchange differences on translation are taken to the statement of financial performance. Hedged assets and liabilities are translated at the rate of exchange determined by the underlying hedge contract.

Foreign currency items in the statement of financial performance of New Zealand operations recognised through the period are translated at the average monthly exchange rate ruling for that month. Statements of financial performance of foreign operations are translated at the average monthly exchange rate ruling for the year.

Outstanding forward foreign exchange contracts which are not designated as hedges are valued at the forward rate of exchange at balance date and the resulting gains and losses are recognised in the statement of financial performance.

(iii) Investments

Investments in subsidiaries and associate entities are stated at cost.

Short term investments consist of investments which mature or are otherwise realisable within not more than 12 months from the date of purchase and are stated at market value (where available), with resulting gains and losses taken to the statement of financial performance.

(iv) Debt

Debt is stated at face value less unamortised discounts, premiums and prepaid interest. Discounts, premiums and prepaid interest are amortised to interest expense on a yield to maturity basis over the period of the borrowing. Borrowing costs such as origination, commitment and transaction fees are deferred and amortised to expense over the period of the borrowing.

(v) Joint ventures

The Corporation’s method for accounting for a material interest in a joint venture is to recognise in the respective classification categories the amount of:

(a) the Corporation’s share in each of the individual assets employed in the joint venture;

(b) liabilities incurred in relation to the joint venture, including the Corporation’s share of liabilities for which it is severally liable; and

(c) the Corporation’s share of revenue earned and expenses incurred in relation to the joint venture.

(vi) Fixed assets

Fixed assets are valued at the cost at which they were purchased from the Crown as at 1 April 1987, adjusted by subsequent additions at cost, disposals and depreciation.

The cost of purchased fixed assets is the value of 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 their intended service.

The cost of assets constructed by the Corporation, including capital work in progress, includes the cost of all materials used in construction, direct labour on the project, financing costs that are directly attributable to the project and an appropriate proportion of variable and fixed overheads. Costs cease to be capitalised as soon as the asset is ready for productive use and do not include any inefficiency costs. Financing costs on uncompleted capital work in progress are capitalised at the Corporation’s weighted average interest rate.

(vii) Leased assets

The Corporation leases certain plant, equipment, land and buildings.

Leases under which the Corporation assumes substantially all the risks and rewards incidental to ownership have been classified as finance leases and are capitalised. The asset and corresponding liability are recorded at inception of the lease at the fair value of the leased asset, at amounts equivalent to the discounted present value of minimum lease payments, including residual values.