IR has operational assets that include information technology (IT) equipment, furniture, office equipment, motor vehicles and leasehold improvements. The capitalisation thresholds are:
- IT equipment - Over $2,000
- Furniture - Over $2,000
- Office equipment - Over $2,000
- Motor vehicles - No threshold
- Leasehold improvements - No threshold
Certain items of IT equipment, furniture and office equipment, which are low value and high quantity such as chairs and IT monitors, are pooled together. All pooled assets are capitalised.
Property, plant and equipment are stated at historical cost, less accumulated depreciation and impairment losses. Historical cost is the value of consideration given to acquire or create the asset, and includes any directly attributable costs of bringing the asset to working condition for its intended use.
Additions
The cost of an item of property, plant and equipment is recognised as an asset if it is probable that the future economic benefits or service potential associated with the item will flow to IR beyond 1 year, 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.
Subsequent costs
Subsequent costs are capitalised when it is probable that the future economic benefits or service potential associated with the item will flow to IR beyond 1 year and the cost of the item can be measured reliably. All repairs and maintenance are expensed.
Depreciation
Depreciation is provided on a straight-line basis on all property, plant and equipment other than assets under construction. The rate of depreciation will reduce the value of the asset to the estimated residual value over the useful life of the asset. The useful lives of major classes of assets on initial measurement have been estimated as:
- IT equipment - 3 to 5 years
- Furniture - 3 to 10 years
- Office equipment - 5 to 10 years
- Motor vehicles - 3 to 5 years
- Leasehold improvements - 3 to 10 years
Where appropriate the useful life for an individual asset on initial measurement may be set outside of the above ranges.
All property, plant and equipment other than motor vehicles are assumed to have no residual value. Motor vehicles are assumed to have a 20% to 40% residual value.
The cost of leasehold improvements is capitalised and depreciated over the unexpired period of the lease or the estimated remaining useful life of the improvements, whichever is shorter.
Assets under construction are recognised at cost less impairment and are not depreciated. The total cost of a capital project is transferred to the appropriate asset class on its completion and then depreciated.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
Disposals
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are recognised on a net basis in the net surplus or deficit.
| 2024 | IT equipment ($000) | Furniture and office equipment ($000) | Motor vehicles ($000) | Leasehold improvements ($000) | Assets under construction ($000) | Total tangible assets ($000) |
|---|---|---|---|---|---|---|
| Cost | ||||||
| Opening balance as at 1 July 2023 | $16,509 | $12,865 | $3,440 | $59,826 | $13,866 | $106,506 |
| Additions or capitalisation | $6,350 | $5,178 | $2,593 | $4,069 | $969 | $19,159 |
| Transfers between categories | - | - | - | $9,690 | $(9,690) | - |
| Disposals | $(5,933) | $(5,864) | $(2,017) | $(6,742) | - | $(20,556) |
| Closing balance as at 30 June 2024 | $16,926 | $12,179 | $4,016 | $66,843 | $5,145 | $105,109 |
| Accumulated depreciation and impairment losses | ||||||
| Opening balance as at 1 July 2023 | $8,911 | $9,296 | $1,820 | $45,685 | - | $65,712 |
| Depreciation and Impairment | $4,741 | $1,125 | $717 | $4,205 | - | $10,788 |
| Disposals | $(5,670) | $(5,810) | $(1,472) | $(6,631) | - | $(19,583) |
| Closing balance as at 30 June 2024 | $7,982 | $4,611 | $1,065 | $43,259 | - | $56,917 |
| Carrying amount as at 30 June 2024 | $8,944 | $7,568 | $2,951 | $23,584 | $5,145 | $48,192 |
| 2023 | IT equipment ($000) | Furniture and office equipment ($000) | Motor vehicles ($000) | Leasehold improvements ($000) | Assets under construction ($000) | Total tangible assets ($000) |
|---|---|---|---|---|---|---|
| Cost | ||||||
| Opening balance as at 1 July 2022 | $26,906 | $22,021 | $2,813 | $64,193 | $2,503 | $118,436 |
| Additions or capitalisation | $5,147 | $1,534 | $692 | $6,847 | $11,640 | $25,860 |
| Transfers between category | - | - | - | $277 | $(277) | - |
| Disposals | $(15,544) | $(10,690) | $(65) | $(11,491) | - | $(37,390) |
|
Closing balance as at 30 June 2023 |
$16,509 | $12,865 | $3,440 | $59,826 | $13,866 | $106,506 |
| Accumulated depreciation and impairment losses | ||||||
| Opening balance as at 1 July 2022 | $21,139 | $19,211 | $1,440 | $53,819 | - | $95,609 |
| Depreciation and Impairment | $2,722 | $717 | $432 | $3,325 | - | $7,196 |
| Disposals | $(14,950) | $(10,632) | $(52) | $(11,459) | - | $(37,093) |
| Closing balance as at 30 June 2023 | $8,911 | $9,296 | $1,820 | $45,685 | - | $65,712 |
| Carrying amount as at 30 June 2023 | $7,598 | $3,569 | $1,620 | $14,141 | $13,866 | $40,794 |
Impairment
Property, plant and equipment that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Property, plant and equipment are also reviewed annually for indicators of impairment at each balance date. Assets under construction are tested for impairment at each balance date.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable service amount. The recoverable service amount is the higher of an asset’s fair value less costs to sell and value in use.
Value in use is the present value of the asset’s remaining service potential. Value in use is determined based on either the depreciated replacement cost or the restoration cost, depending on the nature of the impairment and the availability of information.
If an asset’s carrying amount exceeds its recoverable service amount, the asset is considered to be impaired and is written down to the recoverable service amount. The impairment loss and any reversal of impairment loss are recognised in the net surplus or deficit.