1408 NEW ZEALAND GAZETTE No. 54

2.3 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (con't)

Depreciation
Depreciation of property, plant and equipment, other than freehold land, has been charged at rates calculated to allocate on a straight-line basis either the assets’ cost, or the 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 3 – 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 are amortised on a straight-line basis over the period of expected benefit, which has been assessed as 20 years. The company revised the period of amortisation from 40 years to 20 years effective from 1 January 2002.

Accounts receivable
Accounts Receivable are stated at their estimated net realisable value.

Revenue recognition
Income from gas lines charges includes an estimated amount for accrued sales for charges not billed at balance date.

Borrowings
Borrowings are stated at face value less unamortised discounts, premiums and prepaid interest. Discounts, premiums and prepaid interest are amortised to interest expense on a yield to maturity basis over the period of the borrowing. Borrowing costs such as origination, commitment and guarantee fees are deferred and amortised over the period of the borrowing.

Reclassification of prior year balances
Certain prior year balances have been reclassified to conform with changes in presentation.

Impact of recently introduced financial reporting standards

Business combinations
The Financial Reporting Standards Board recently issued two new standards: FRS 36 – accounting for acquisition resulting in combinations of entities or operations, and FRS 37 – Consolidating investments in subsidiaries. The introduction of these standards has had no financial effect on the company accounts during the period.

Investments in associates
The Financial Reporting Standards Board recently issued FRS 38 – accounting for investments in associates. The introduction of this standard has had no financial effect on the company accounts during the period.

Property, plant and equipment
The Financial Reporting Standards Board recently issued FRS 3 – accounting for property, plant and equipment. The introduction of this standard has had no financial effect on the company accounts during the period.

Changes in accounting policies
The company has revised its accounting for intangible gas incentive assets whereby these are now written off as current expenditure in the year in which they are incurred, effective 1 January 2002. The carrying value as at 1 January 2002 has been recognised as an expense in the current year. The effect of this change is to increase the charge to the statement of financial performance for the current year by $3.2m.

There have been no other changes in accounting policies.