Note 10: Property, plant, and equipment

Accounting policy

Property, plant, and equipment includes furniture and fittings, leasehold improvements, office equipment, information technology hardware, and motor vehicles. Property, plant, and equipment is measured at cost, less accumulated depreciation and impairment losses.

Additions

Individual assets, or groups of assets, are capitalised if their cost is greater than $1,000.

The cost of an item of property, plant, and equipment is recognised as an asset only when it is probable that future economic benefits or service potential associated with the item will flow to the Office and the cost of the item can be measured reliably.

In most instances, an item of property, plant, and equipment is recognised at its cost. Where an asset is acquired through a non-exchange transaction, it is recognised at fair value as at the date of acquisition.

Disposals

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the surplus or deficit.

Subsequent costs

Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to the Office and the cost of the item can be measured reliably.

The costs of day-to-day servicing of property, plant, and equipment are recognised in the surplus or deficit as they are incurred.

Depreciation

Depreciation is provided on a straight-line basis on all property, plant, and equipment, at rates that will write off the cost of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of assets have been estimated as follows:

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is the shorter.

The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year-end.

Impairment of property, plant, and equipment

Property, plant, and equipment assets held at cost that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.

Value in use is determined using an approach based on a depreciated replacement cost approach, a restoration cost approach, or a service units approach. The most appropriate approach used to measure value in use depends on the nature of the impairment and availability of information.

If an asset's carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount. The impairment loss is recognised in the surplus or deficit.

The reversal of an impairment loss is also recognised in the surplus or deficit.

Critical accounting estimates and assumptions

Determining the depreciation rates for physical assets requires judgement as to the likely period of use of the assets. Different assessments of useful lives would result in different values being determined for depreciation costs, accumulated depreciation, and net book values.

Breakdown of property, plant, and equipment and further information

Furniture and fittings
$000
Office equipment
$000
Leasehold improvements
$000
IT hardware
$000
Motor vehicles
$000
Total
$000
Cost
Balance at 1 July 2018 1,594 495 3,169 2,389 1,093 8,740
Additions 45 8 - 456 339 848
Disposals (6) - - - (404) (410)
Balance at 30 June 2019 1,633 503 3,169 2,845 1,028 9,178
Additions 332 41 204 456 197 1,230
Disposals (164) - - (168) (216) (548)
Balance at 30 June 2020 1,801 544 3,373 3,133 1,009 9,860
Accumulated depreciation and impairment losses
Balance at 1 July 2018 1,479 412 1,176 1,650 476 5,193
Depreciation expense 54 42 228 441 129 894
Elimination on disposal (6) - - - (249) (255)
Balance at 30 June 2019 1,527 454 1,404 2,091 356 5,832
Depreciation expense 110 42 228 486 122 988
Elimination on disposal (164) - - (169) (129) (462)
Balance at 30 June 2020 1,473 496 1,632 2,408 349 6,358
Carrying amounts
Balance at 1 July 2018 115 83 1,993 739 617 3,547
Balance at 30 June 2019 106 49 1,765 754 672 3,346
Balance at 30 June 2020 328 48 1,741 725 660 3,502