✨ Financial Accounting Policies
4176 NEW ZEALAND GAZETTE, No. 166 30 SEPTEMBER 2005
date. The value is determined based on current wage and salary levels and service to date.
A liability for gratuities is accrued for the employees value of current entitlements. The value is calculated based on the age of the employee, wage and salary levels and current length of service.
h) Income Tax
The group adopts the liability method of accounting for deferred taxation.
The taxation charge against the surplus of the period is the estimated liability in respect of that surplus after allowance for all permanent differences and timing differences not expected to crystallise in the foreseeable future. This is the partial basis for the calculation of deferred taxation.
Future taxation benefits attributable to timing differences or losses carried forward are recognised in the financial statements only where there is virtual certainty that the benefit of the timing differences will be realised or any losses utilised.
The taxation charge against the surplus of the period is the estimated liability in respect of that surplus using a proforma income tax rate of 33%.
i) Inventory
Inventory is valued at the lower of historical cost and net realisable value. The weighted average method has been used to determine historical cost.
j) Investments
Investments are valued at the lower of cost and net realisable value.
k) Impairment
Assets are assessed for impairment at each reporting date. If the estimated recoverable amount of an asset is less than its carrying amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the statement of financial performance.
l) Leases
Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are included in the determination of operating surplus before taxation in equal instalments over the lease term.
m) Finance Leases
Leases under which the company assumes substantially all the risks and rewards of ownership are classified as finance leases and are capitalised. The finance charge is allocated to periods during the lease term so as to allocate a constant rate of return.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2005, No 166
Gazette.govt.nz —
NZ Gazette 2005, No 166
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