✨ Financial Statements Continuation
30 NOVEMBER 2012 NEW ZEALAND GAZETTE, No. 143 4203
Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Payments under these leases are charged as expenses in the periods which they are incurred.
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to the ownership of the leased item are classified as finance leases. These are capitalised at the lower of the fair value of the asset or the present value of the minimum lease payments. The leased assets and corresponding lease liabilities are recognised in the statement of financial position. The leased assets are depreciated over the period the Company is expected to benefit from their use.
Critical Accounting Estimates and Assumptions
In preparing these financial statements the Company has made estimates and assumptions concerning the future which may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
At each balance date the Company reviews the useful lives and residual values of its property, plant and equipment. Assessing the appropriateness of useful life and residual value estimates of property, plant and equipment requires the Company to consider a number of factors such as the physical condition of the asset, expected period of use of the asset, and expected proceeds from the sale of the asset.
An incorrect estimate of the useful life or residual value will impact on the depreciable amount of an asset, therefore impacting on the depreciation expense recognised in the statement of comprehensive income, and carrying amount of the asset in the statement of financial position. The Company minimises the risk of this estimation uncertainty to its infrastructure assets by:
- an annual review by an independent contractor of the value of the infrastructure assets to determine if any material changes exist
- physical inspection of assets
- asset replacement programmes
- review of second hand market prices for similar assets
- analysis of previous assets sales, and
- completing a revaluation of the infrastructure assets every third year.
The Company has not made significant changes to past assumptions concerning useful lives and residual values. The carrying amounts of property, plant and equipment are disclosed in note 4.
Changes in Accounting Policies
There have been no changes in accounting policy. All policies have been applied on bases consistent with those used in the previous period.
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NZ Gazette 2012, No 143
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GasNet Limited Financial Statements
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🏭 Trade, Customs & IndustryFinancial statements, Accounting policies, Leases, Operating leases, Finance leases, Critical accounting estimates, Depreciation, Asset valuation, Accounting policies, Changes in accounting policies