25 NOVEMBER 2013 NEW ZEALAND GAZETTE, No. 155 4327

TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS

c) Goods and services tax (GST)
The statement of comprehensive income and the cash flow statement are prepared so that all components are stated exclusive of GST. All items in the statement of financial position are stated exclusive of GST with the exception of receivables and payables, which include GST.

d) Accounts receivable
Accounts receivable are recorded initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less any impairment. Impairment of receivables is calculated on an individual customer basis and recognised in cases where, based on objective evidence, the debt will not be paid when due by the customer.

e) Inventories
Stocks of materials are recorded at the lower of cost and net realisable value after due consideration for excess and obsolete items. Cost is determined on a weighted average basis.

f) Investments
Regular way financial asset purchases
All regular way financial asset purchases are accounted for on settlement date and not trade date.

Fair value through profit or loss
Investments (excluding Fonterra shares (section j)), derivatives (section g) and property loans (section h)) are designated as fair value through profit or loss on the basis of preventing an “accounting mismatch”.

Fair values of quoted investments are based on prices current at balance date. If the market for a financial asset is not active, fair value is established by using valuation techniques including recent arm’s length transactions, reference to similar instruments, discounted cash flow analysis and option pricing models.

g) Other financial assets at fair value through profit or loss
Other assets at fair value through profit or loss are derivatives. Derivatives are classified as held for trading unless they are designated as hedging instruments in a hedging relationship. Realised and unrealised gains and losses arising from changes in the fair values are included in profit or loss in the period in which they arise.

h) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not traded in an active market. These assets are carried at amortised cost using the effective interest rate method.

i) Trade and other payables
Trade and other payables are carried at amortised cost. They represent liabilities for goods and services provided to the Transpower Lines Business prior to the end of the financial year that are unpaid.

Provisions are liabilities of uncertain timing or amount. They are measured at the amounts expected to be paid when the liabilities are settled.

j) Available for sale financial assets
Available for sale financial assets are non-derivatives that are either designated as available for sale by management or not designated in any of the other categories. These investments are carried at fair value with any unrealised gains and losses arising from changes in fair value recognised directly in other comprehensive income. On sale or on impairment, the accumulated fair value adjustments are included in profit or loss. The Transpower Lines Business has classified Fonterra shares, which are held as part of a land portfolio, in this category.