✨ Financial Statements Notes
NEW ZEALAND GAZETTE, No. 134
30 NOVEMBER 2007
TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS
NOTES TO THE FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 30 JUNE 2007
(f) Property, plant and equipment
Historical Cost Measurement
Property, plant and equipment are recorded at cost less accumulated depreciation. In respect of assets acquired prior to 1 July 2003, cost represents the valuation of those assets at 30 June 2003. In respect of assets acquired after 1 July 2003 cost is determined by including all costs directly associated with bringing the property, plant and equipment to their location and condition.
When the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable value.
Capital Work in Progress
Capital work in progress is recorded at cost. Cost is determined by including all costs directly associated with bringing the property, plant and equipment to their location and condition. Finance costs incurred during the period of time that is required to complete and prepare the property, plant and equipment for its intended use are capitalised as part of the total cost for capital work in progress.
The finance costs capitalised are based on Transpower’s weighted average cost of capital.
Assets are transferred from capital work in progress to property, plant and equipment as they become operational and available for use.
(g) Depreciation
Depreciation of property, plant and equipment is calculated using the straight line method to allocate the cost or valuation of the property, plant and equipment over their expected useful lives, after due allowance for their expected residual value. The estimated economic lives are as follows:
| Asset Type | Economic Life |
|---|---|
| Transmission lines | 20-70 years |
| Freehold buildings | 20-50 years |
| Substations | 8-55 years |
| HVDC | 30 years |
| Communications | 3-25 years |
| Administration assets | 3-10 years |
(h) Leased Assets
The Transpower Lines Business leases certain plant, equipment, land and buildings.
Finance leases effectively transfer substantially all of the risks and benefits incidental to the ownership of the leased item to the entity. Assets acquired by means of a finance lease are capitalised at the lower of the fair value of the asset and the present value of the minimum lease payments. Leased assets are depreciated over their economic lives. A corresponding liability is also established at the inception of each lease and each lease payment is allocated between the liability and finance costs.
Under operating leases all the risks and benefits of ownership are effectively retained by the lessor. Operating lease payments are representative of the pattern of benefits derived from the leased assets and are accordingly recognised in the Statement of Financial Performance as expenses, in the period in which they are incurred.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2007, No 134
Gazette.govt.nz —
NZ Gazette 2007, No 134
✨ LLM interpretation of page content
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Transpower New Zealand Limited Lines Business Notes to the Financial Statements
(continued from previous page)
🏭 Trade, Customs & Industry30 November 2007
Financial Statements, Notes, Property, Plant, Equipment, Depreciation, Leased Assets, Accounting Policies, Historical Cost Measurement, Capital Work in Progress, Economic Life, Finance Leases, Operating Leases, Transpower