✨ Financial Accounting Policies
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NEW ZEALAND GAZETTE, No. 155
29 NOVEMBER 2004
2.3 STATEMENT OF ACCOUNTING POLICIES continued
Financial instruments
Vector uses derivative financial instruments within predetermined policies and limits in order to manage its exposure to fluctuations in foreign currency exchange rates and interest rates.
Derivative financial instruments that are designated as hedges of specific items are recognised on the same basis as the underlying hedged items.
Vector does not engage in speculative transactions or hold derivative financial instruments for trading purposes.
Fees and other costs incurred in raising debt finance are capitalised and amortised over the term of the debt instrument or debt facility.
Interest income and expenses are recognised on an accrual basis. Where a debt instrument is issued at a discount or premium, the discount or premium is capitalised and amortised over the life of the instrument.
Provisions
Employee entitlements
Employee entitlements to salaries and wages, annual leave, long-term leave and other benefits are recognised when they accrue to employees.
Onerous contracts
Where the benefits expected to be derived from a contract are lower than the unavoidable costs of the meeting the company’s obligation under the contract, a provision is recognised. The provision is stated at the present value of the future net cash outflows expected to be incurred in respect of the contract.
Provision for claims
A provision for claims is recognised as a liability where the company considers that a constructive or legal obligation to settle items under litigation or dispute may exist in the foreseeable future. A provision for claims is recognised where the likelihood of a resultant liability is considered more probably than not. Other claims where the likelihood of a resultant liability is more than remote but insufficient to warrant a provision are disclosed as contingent liabilities.
Foreign currencies
Transactions in foreign currencies are translated at the New Zealand rate of exchange ruling at the date of the transaction. At balance date foreign monetary assets and liabilities not hedged by foreign currency derivative instruments are translated at the closing rate, and exchange variations arising from these translations are included in the statement of financial performance as operating items. Monetary assets and liabilities in foreign currencies at balance date hedged by foreign currency derivative instruments are translated at contract rates.
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, subject to impairment review by the directors on an annual basis.
Changes in Accounting policies
There have been no changes in accounting policies during the year and all policies have been applied on a basis consistent with those used in the prior period.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2004, No 155
Gazette.govt.nz —
NZ Gazette 2004, No 155
✨ LLM interpretation of page content
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Vector Limited Gas Information Disclosure
(continued from previous page)
🏭 Trade, Customs & Industry17 November 2004
Financial Statements, Balance Sheet, Assets, Liabilities, Equity, Accounting Policies