New Zealand Gazette – 1997 – No. 165

Page 3902

✨ Financial Statements Notes



3902 NEW ZEALAND GAZETTE No. 165

TRANSPOWER NEW ZEALAND LIMITED GROUP

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 1997

Service potential refers to the ability of the asset to provide a satisfactory level of operating capability into the future. If, in any year, the level of expenditure required to maintain the operating capability of the infrastructure asset is insufficient to preserve the service potential of the asset, the net book value of the infrastructure asset is reduced and the Statements of Financial Performance are charged with this shortfall. This is called the "infrastructure asset service potential adjustment". Expenditure in subsequent periods to redress this shortfall and bring the infrastructure asset back to the requisite level of service potential increases the net book value of the infrastructure asset.

(h) Depreciation

Depreciation of non infrastructure fixed assets is calculated using the straight line method to allocate the cost or valuation of the fixed assets over their expected useful lives, after due allowance for their expected residual value. The estimated economic lives are as follows:

Asset Type Economic Lives
Freehold buildings 20-25 years
Substations 25-55 years
HVDC link 30 years
HVDC leased assets 30 years
Communications 10-25 years
Minor assets 3-10 years

(i) Leased Assets

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

Finance leases effectively transfer substantially all of the risks and benefits incidental to the ownership of the leased item to the entity. Assets acquired by means of a finance lease are capitalised at the lower of the fair value of the asset or the present value of the minimum lease payments. Leased assets are depreciated over their economic lives. A corresponding liability is also established at the inception of each lease and each lease payment is allocated between the liability and finance costs.

Under operating leases all the risks and benefits of ownership are effectively retained by the lessor. Operating lease payments are representative of the pattern of benefits derived from the leased assets and are accordingly recognised in the Statements of Financial Performance as expenses, in the period in which they are incurred.



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✨ LLM interpretation of page content

🏭 TRANSPower New Zealand Limited Information Disclosure (continued from previous page)

🏭 Trade, Customs & Industry
Electricity, Financial Statements, Accounting Policies, Reporting Entity, Measurement Base, Capital Work in Progress, Infrastructure Asset, Depreciation, Leased Assets