New Zealand Gazette – 1999 – No. 147

Page 3514

✨ Financial Statements Notes



3514

NEW ZEALAND GAZETTE

No. 147

Notes to and forming part of the financial statements for the year ended 31 March 1999

  1. STATEMENT OF ACCOUNTING POLICIES

Reporting Entity

The financial statements have been drawn up in accordance with the requirements of the Companies Act 1993, the Financial Reporting Act 1993 and Regulation 6 of the Electricity (Information Disclosure) Regulations 1999. The financial statements have been extracted from the audited financial statements of VECTOR Limited parent company and represent the electricity line business activities of the company.

VECTOR Limited is a company registered under the Companies Act 1993.

Measurement Base

The financial statements are prepared on the basis of historical cost modified by the revaluation of certain fixed assets.

The avoidable cost allocation methodology (ACAM) used for allocating costs and assets and liabilities between "Line" and "Other" activities is in accordance with the Electricity Information Disclosure Handbook March 1999.

Specific Accounting Policies

The following specific accounting policies that materially affect the measurement of financial performance and the financial position have been applied:

a) Income Recognition

Income from electricity sales includes the value of units assessed as being recorded on meters as at 31 March 1999, but for which invoices had not been rendered.

b) Fixed Assets

Fixed assets other than distribution systems are recorded at cost less accumulated depreciation. Distribution systems are recorded at their Optimised Deprival Value (ODV) - the lower of optimised depreciated value and economic value. Revaluations are carried out at least every three years and are conducted under the guidance of independent experts.

c) Depreciation

Depreciation is provided to allocate the assets’ cost or revalued amount less the estimated residual value over their estimated useful lives as follows:

  • Freehold buildings 50 years
  • Distribution Systems 17 – 40 years
  • Other Plant and Equipment 18% per annum diminishing value

d) Accounts Receivable

Receivables are valued at their estimated realisable value.

e) Income Tax

The income tax expense charged to the statement of financial performance includes both the current year’s provision and the income tax effects of timing differences calculated using the liability method. Tax effect accounting is applied on a comprehensive basis to all timing differences. A debit balance in the deferred tax account, arising from timing differences or income tax benefits from income tax losses, is only recognised if there is virtual certainty of realisation.

f) Stores

Stores are valued on the basis of weighted average cost price.

g) Leases

Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased assets, are included in the determination of the surplus/(deficit) in equal instalments over the lease term.

The cost of improvements to leasehold property is capitalised and amortised over the unexpired period of the lease or the estimated useful life of the improvements, whichever is the shorter.



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✨ LLM interpretation of page content

🏭 Financial Performance of Vector Limited for the year ended 31 March 1999 (continued from previous page)

🏭 Trade, Customs & Industry
Financial Performance, Revenue, Surplus, Deficit, Tax, Electricity Lines Business