✨ Financial Accounting Policies
2454 NEW ZEALAND GAZETTE No. 98
as each becomes operational and available for use. Revenue expenditure is defined
as expenditure which is incurred in the maintenance and operation of the fixed assets
of the Company.
(e) Accounts receivable
Accounts receivable are valued at their expected realisable value. All known bad
debts are written off during the financial year.
(f) Inventories
Stocks and inventories are valued at the lower of cost (FIFO or weighted average)
and net realisable value, with additional allowances for obsolescence where
necessary. Chargeable work in progress includes direct materials and labour and an
allocation of overheads that directly relate to the contract.
(g) Depreciation
Depreciation has been provided on fixed assets using the straight line method at
rates which amortise the cost or valuation less estimated residual value over their
economic lives.
The main bases are periods not exceeding:
Electricity distribution system 70 years
Buildings 50 years
Cars and vans 5 years
Trucks 7 years
Plant and equipment 10 years
Computer equipment and software 3 years
The electricity distribution system economic lives have been set consistent with the
Ministry of Commerce’s revised ODV Handbook. The economic lives range from 15 -
70 years for the different components of the distribution system.
(h) Fixed assets
The group’s fixed assets are revalued on a cyclic basis at least once every three
years by independent valuers to net current value. Any subsequent fixed asset
additions are initially recorded at cost until the next revaluation.
(i) Income tax
The income tax expense charged against the surplus for the year is the estimated
liability in respect of that surplus and is calculated after allowance for permanent
differences and timing differences not expected to reverse in future periods. This is
the partial basis for the calculation of deferred tax.
Tax effect accounting is applied on a partial basis using the liability method. 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.
(j) Employee entitlements
Provision is made in respect of the Company’s liability for annual and long service
leave. The annual leave liability has been calculated on an actual entitlement basis
at current rates of pay. The long service leave liability has been assessed on an
actuarial basis.
Changes in Accounting Policies
There have been no changes in accounting policies. The policies have been applied on bases
consistent with those used in previous years.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2000, No 98
Gazette.govt.nz —
NZ Gazette 2000, No 98
✨ LLM interpretation of page content
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Notes to the Financial Statements of Orion New Zealand Limited
(continued from previous page)
💰 Finance & RevenueAccounting Policies, Revenue Expenditure, Accounts Receivable, Inventories, Depreciation, Fixed Assets, Income Tax, Employee Entitlements