HORSHAM RURAL CITY COUNCIL
NOTES TO THE FINANCIAL REPORT (Cont.) FOR THE YEAR ENDED 30th JUNE, 2012
1 SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Depreciation of Property, Infrastructure, Plant and Equipment (cont.) Major depreciation periods used are listed below and are consistent with the prior year unless otherwise stated:
Road Assets Pavement Footpaths
Kerb and Channel Drainage Bridges
Bike Tracks
Land Improvements Buildings
Other Structures Plant & Equipment Furniture & Fittings
12 - 60 years 40 - 50 years 50 - 55 years 100 years 100 years 30 years
10 - 100 years 20 - 143 years 10 - 100 years 1 - 30 years 3 - 20 years
(e) Repairs and Maintenance Routine maintenance, repair costs and minor renewal costs are expensed as incurred. When the repair relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold the cost is capitalised and depreciated. The carrying value of the replaced asset is expensed.
(f) Borrowing Costs Borrowing costs are recognised as an expense in the period in which they are incurred, except where they are capitalised as part of a qualifying asset constructed by Council. Except where specific borrowings are obtained for the purpose of specific asset acquisition, the weighted average interest rate applicable to borrowings at balance date, excluding borrowings associated with superannuation, is used to determine the borrowing costs to be capitalised.
Borrowing costs include: interest on bank overdrafts, interest on borrowings, and finance lease charges.
(g) Recognition and Measurement of Assets Acquisition The purchase method of accounting is used for all acquisitions of assets, being the fair value of the assets provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition. Fair value is the amount for which the asset could be exchanged between knowledgeable willing parties in an arm's length transaction.
Where assets are constructed by Council, cost includes all materials used in construction, direct labour, borrowing costs incurred during construction and an appropriate share of directly attributable variable and fixed overheads.
The following classes of assets have been recognised in note 20. In accordance with Council's policy, the threshold limits detailed below have been applied when recognising assets within an applicable asset class and unless otherwise stated are consistent with the prior year: Threshold Limit $
Class of asset Land
Land Under Road Reserves Buildings
Road Assets Pavement Footpaths
Kerb and Channel Drainage Bridges
Bike Tracks 72 Horsham Annual Report 2011 - 2012
1,000 1,000 5,000
5,000 5,000 5,000 5,000 5,000 5,000
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