✨ Financial Statements Continuation
4950
NEW ZEALAND GAZETTE, No. 197
28 NOVEMBER 2005
Vector Limited & Subsidiaries
Gas Distribution Activities
Statement of Accounting Policies (continued)
For the year ended 30 June 2005
m) Financial instruments (continued)
Fees and other costs incurred in raising debt finance not directly attributable to the acquisition of subsidiaries 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.
Fair value adjustments on derivative instruments acquired are initially recognised in the statement of financial position as a mark to market adjustment. Subsequent to initial recognition, the mark to market adjustment is amortised to the statement of financial performance over the period of the underlying derivative.
n) 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 statements 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.
Changes in accounting policy
With effect from 1 July 2004, the board of directors elected to change the accounting policy applied to fees and other costs incurred in raising debt finance directly attributable to the acquisition of subsidiary companies. As allowed by NZ GAAP, such fees and other costs are now recognised as part of the cost of acquisition within goodwill at the date of acquisition of the subsidiary and are amortised over a period up to a maximum of 20 years. This change is necessary to give a true and fair view of the period over which benefits are expected to be derived from these debt raising costs which exceeds the term of the debt facilities themselves.
The effect of this change in accounting policy for the year ended 30 June 2005 has been to increase intangible assets by $2.1 million and decrease capitalised finance costs by $0.9 million in the statement of financial position, and to decrease net interest expense by $1.3 million and increase amortisation of goodwill by $0.1 million in the statement of financial performance.
The cumulative impact, after adjusting for the consequent increase in tax expense of $0.4 million, is a $0.8 million reduction in the net deficit for the period.
With the exception of the above, all policies have been applied on a basis consistent with those used in the year ended 30 June 2004.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2005, No 197
Gazette.govt.nz —
NZ Gazette 2005, No 197
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