New Zealand Gazette – 2004 – No. 157

Page 3854

✨ Financial Accounting Policies



3854

NEW ZEALAND GAZETTE, No. 157

30 NOVEMBER 2004

Under the modified historical cost method, the revaluation, reflecting the
difference between the net carrying value of the assets and the valuation (net
of the deferred tax), is recorded in the asset revaluation reserve. In arriving at
the net carrying value any accumulated depreciation is written back against
the asset value. The revaluation increase or decrease is transferred from the
revaluation reserve to retained earnings on the disposal of an asset.

Construction in progress is recorded at cost. For projects having a cost in
excess of $500,000 and a construction period of not less than three months,
finance costs relating to that project are capitalised. The finance costs
capitalised are based on the actual cost directly attributable to the construction
of the asset. Where this is not clearly identifiable, NGC's cost of debt is used.
Assets constructed by NGC are commissioned and transferred from
construction in progress to fixed assets as each facility or operating unit within
a facility becomes operational and available for use.

iii) Current Assets
Accounts receivables are valued at their estimated realisable value.
Inventories are valued at the lower of cost and net realisable value. Cost is
determined on a weighted average basis. All other current assets are valued
at their estimated realisable value.

iv) Depreciation
The rates of depreciation vary according to the nature and economic lives of
the assets and fall within the following ranges (on a straight line basis):

Low Pressure Pipelines 25-50 years
Meters and Stations 15-45 years
Plant, Equipment & Motor Vehicles 5-20 years
Buildings 40-100 years
Capital Spares 5-20 years

Depreciation of pipelines commences when the pipeline is physically complete
and flowing gas.

v) Deferred Income
Contributions received from gas utilities and other parties towards the capital
expenditure on pipelines are accounted for initially in a deferred income
account. Amortisation to income of the deferred income account takes place
only after the obligations in connection with the contributions are performed.
The deferred income account is amortised to the statement of financial
performance over the life of the pipelines to which they relate or over the life of
the gas supply contract, whichever is the shorter.



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Online Sources for this page:

VUW Te Waharoa — PDF NZ Gazette 2004, No 157


Gazette.govt.nz — PDF NZ Gazette 2004, No 157




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