ADAVB 2018/2019 Annual Report

A D A V B A N N U A L R E P O R T 2 0 1 8 / 1 9 | 3 3 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Property, Plant and Equipment Each class of property plant and equipment is carried at cost net of any accumulated depreciation and impairment losses. The cost of plant and equipment constructed within the consolidated entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the itemwill flow to the economic entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets, including buildings are depreciated on a straight-line basis over the asset’s useful life commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of fixed asset Depreciation rates Freehold Buildings 3.00 % Furniture and equipment 4% to 40% The assets’ residual values and useful lives are reviewed, and adjusted prospectively if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (e) Financial instruments Initial Recognition and Measurement Financial assets and financial liabilities are recognised when the consolidated entity becomes a party to the contractual provisions of the financial instruments, and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss, which are measured initially at fair value. Classification and Subsequent Measurement of Financial Assets Final assets are subsequently measured at fair value through profit or loss, fair value through other comprehensive income or amortised cost. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items. Classifications are determined by both i) the entity’s business model for managing the financial asset and ii) the contractual cash flow characteristics of the financial asset. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019