✨ Financial Statements Notes
4192
NEW ZEALAND GAZETTE
No. 162
TRANSPower NEW ZEALAND LIMITED LINES BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2000
(f) Fixed Assets (cont.)
The finance costs capitalised are based on the actual costs directly attributable to the construction of the asset. Where this is not clearly identifiable, Transpower's weighted average cost of capital is used.
Assets are transferred from capital work in progress to fixed assets as they become operational and available for use.
(g) Infrastructure Asset
The infrastructure accounting methodology is applied to the infrastructure asset. The infrastructure asset consists of the individual asset components that form the network of transmission lines comprising the National Grid. These individual components are regarded together as a single asset. All other assets are classified as non-infrastructure assets.
It is the Transpower Lines Business's intention to maintain the operating capability of the transmission line network into the foreseeable future.
Operating capability refers to the output of service of the infrastructure asset at a point in time and is determined by reference to attributes such as physical output capacity, associated operating costs and quality of output.
Transpower's asset management practices result in the infrastructure asset having an extremely long life. Having regard to the life and residual value of the infrastructure asset the Directors consider that the depreciation of the asset is immaterial. Accordingly, no depreciation is charged on the infrastructure asset.
Expenditure incurred to maintain the operating capability of the infrastructure asset is treated as an expense in the Statement of Financial Performance. This treatment differs from standard accounting for fixed assets which allocates the cost of the asset over its estimated economic life and capitalises any expenditure that extends the asset's life.
Expenditure on the infrastructure asset that enhances or develops the operating capability of the asset is capitalised.
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.
Next Page →
Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2000, No 162
Gazette.govt.nz —
NZ Gazette 2000, No 162
✨ LLM interpretation of page content
🏭
Transpower New Zealand Limited Statement of Cashflows
(continued from previous page)
🏭 Trade, Customs & IndustryFinancial Statements, Accounting Policies, Transpower, 2000