4 DECEMBER 2009 NEW ZEALAND GAZETTE, No. 179 4353

Income Statement. The gain or loss relating to the realised ineffective portion is recognised immediately in the financing costs line of the Income Statement. Amounts deferred in equity are recycled in profit or loss in the periods when the hedged item is recognised in profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.

Hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, if the forecast transaction is still expected to occur, any cumulative gain or loss on the hedging instrument is recognised in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the Income Statement for the period.

Fair value hedges

Hedge accounting is discontinued when the hedge instrument expires or is sold, terminated or no longer qualifies for hedge accounting. The adjustments to the carrying amount of the hedge item arising from the hedged risk is amortised to the Income Statement from that date.

d) Dividend distribution

Dividend distribution to the Division’s shareholders is recognised as a liability in the Financial Statements in the period in which the shareholders’ right to receive payment has been established.

e) Employee entitlements

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave, long-service leave and sick leave when it is probable that settlement will be required and they are capable of being measured reliably.

Provisions made in respect of employee benefits expected to be settled within 12 months are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Provisions made in respect of employee benefits that are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Division in respect of services provided by employees up to reporting date.

Defined superannuation plans

For defined contribution superannuation plans, the Division recognises and expenses the obligation during the period they arise.

There are a small number of employees that are part of a state-defined benefit superannuation plan. The Division has no legal or constructive obligation to pay future benefits that are guaranteed by the crown. As a result the plans are accounted for as a defined contribution plan.

f) Financial assets

Financial assets are recognised and derecognised on trade date where purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned. They are initially measured at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.