37
2017 WEL Networks
|
Annual Report
wel.co.nz
Deferred income tax assets are recognised only to the
extent that it is probable that future taxable profit will
be available against which the temporary differences
can be utilised.
Deferred income tax is provided on temporary differences
arising on investments in subsidiaries and associates,
except for a deferred income tax liability where the timing
of the reversal of the temporary difference is controlled by
the Group and it is probable that the temporary difference
will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when
there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred
income taxes assets and liabilities relate to income taxes
levied by the same taxation authority on either the same
taxable entity or different taxable entities where there is
an intention to settle the balances on a net basis.
(e)
Cash and cash equivalents
In the statement of cash flows, cash and cash equivalents
includes cash in hand, deposits held at call with banks,
other short-term, highly liquid investments with original
maturities of three months or less and bank overdrafts.
In the balance sheet, bank overdrafts are shown within
borrowings in current liabilities.
(f)
Trade and other receivables
Trade receivables are amounts due from customers for
merchandise sold or services performed in the ordinary
course of business. If collection is expected in one year
or less (or in the normal operating cycle of the business if
longer), they are classified as current assets. If not, they
are presented as non-current assets.
Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
A provision for impairment of trade receivables is
established when there is objective evidence that the
Group will not be able to collect all amounts due according
to the original terms of the receivables. The amount of the
provision is the difference between the asset’s carrying
amount and the present value of estimated future cash
flows, discounted at the original effective interest rate.
The carrying amount of the asset is reduced through
the use of an allowance account, and the amount of the
loss is recognised in the profit and loss component of
the statements of comprehensive income within ‘other
expenses’. When a trade receivable is uncollectible, it
is written off against the allowance account for trade
receivables. Subsequent recoveries of amounts
previously written off are credited against ‘other
expenses’ in the profit and loss component of the
statement of comprehensive income.
(g)
Impairment of non-financial assets
Assets that have an indefinite useful life – for example,
goodwill or intangible assets not ready to use – are
not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may 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. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units).
Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the
impairment at each reporting date.
(h)
Property, plant and equipment
Land and buildings are recorded at fair value, based
on valuations by external independent valuers, less
subsequent depreciation for buildings. Valuations are
performed with sufficient regularity to ensure that the
fair value of a revalued asset does not differ materially
from its carrying amount. The electricity distribution and
WEL NETWORKS LIMITED
Notes to the financial statements
For the year-ended 31 March 2017
(continued)
