✨ Financial Statements Notes
28 AUGUST
NEW ZEALAND GAZETTE
2655
2.5 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (continued)
Fixed assets
All fixed assets are initially recorded at cost. The cost of assets constructed by UnitedNetworks includes the cost of all material used in construction, direct labour on the project and financing costs that are directly attributable to the project. Costs cease to be capitalised as soon as the asset is ready for use.
The System Fixed Assets have been revalued as at 31 March 2001. The methodology adopts a three-step process. Firstly, an asset based valuation – the Optimised Depreciated Replacement Cost (ODRC) value is determined. Secondly, the Economic Value (EV) is established through a process of sustainability checking. Finally, the Optimised Deprival Value (ODV) – is determined as the minimum of the ODRC and the EV. The company engaged independent valuers to undertake the ODV valuation, which appears in the statement of financial position and the notes thereto.
Financial instruments
The company has financial instruments with off-balance sheet risk for the primary purpose of reducing its exposure to fluctuations in interest rates and foreign exchange rates.
Financial instruments entered into as hedges of an underlying exposure are accounted for on the same basis as the underlying exposure. Financial instruments entered into with no underlying exposure are accounted for on a mark to market basis.
Depreciation
Depreciation of fixed assets, other than freehold land, has been charged at rates calculated to allocate on a straight-line basis the assets’ cost or valuation, less estimated residual value, over their estimated useful lives as follows:
(i) Freehold buildings 50 – 100 years
(ii) Reticulation system 15 – 70 years
(iii) Plant, vehicles and equipment 2 – 10 years
Goodwill
Goodwill on acquisition of businesses is amortised on a straight line basis over the period of expected benefit or 20 years, whichever is the lesser.
Identifiable intangibles
Identifiable intangibles arising from acquisition of reticulation assets is amortised on a straight line basis over the period of expected benefit, which has been assessed as 40 years.
Accounts receivable
Accounts receivable are stated at their estimated net realisable value.
Inventory
Inventory is stated at the lower of cost and net realisable value. In arriving at net realisable value an allowance is made for deterioration and obsolescence.
Revenue recognition
Income from line charges includes an estimated amount for accrued sales for charges not billed at balance date.
Distributions from UnitedNetworks Shareholders Society Inc (UNSS)
As with 2000, the distributions received from UNSS are treated as a distribution from a trust, being a return of dividends previously paid to the trust, of which the company is the beneficiary. Under the avoidable cost allocation methodology these distributions have been identified as dividends and allocated to the Other Business.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2001, No 104
Gazette.govt.nz —
NZ Gazette 2001, No 104
✨ LLM interpretation of page content
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Notes to Financial Statements for UnitedNetworks
(continued from previous page)
🏭 Trade, Customs & IndustryFinancial Statements, Accounting Policies, Electricity Regulations, UnitedNetworks, Special Purpose Statements, Fixed Assets, Depreciation, Goodwill, Intangibles, Revenue Recognition