2017 WEL Networks
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Annual Report
38
fibre networks are also measured at fair value on the
basis of an independent valuation prepared by expert
valuers using a discounted cash flow method on at least
a triennial period. Any accumulated depreciation at the
date of revaluation is eliminated against the gross carrying
amount of the asset, and the net amount is restated to the
revalued amount of the asset. All other property, plant and
equipment are stated at historical cost less depreciation.
Historical cost includes expenditure that is directly
attributable to the acquisition of the items. The cost of
self-constructed assets includes the cost of materials and
direct labour and an allowance for overheads. Borrowing
costs are capitalised in respect of qualifying assets. For
the Electricity Network qualifying assets are valued at
$200,000 or more and which take more than three months
to construct, for the Fibre Network qualifying assets relate
to the construction of the fibre network.
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 item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount
of the replaced part is derecognised. All other repairs and
maintenance are charged to the profit and loss component
of the statement of comprehensive income during the
financial period in which they are incurred.
Labour is capitalised against network, connection and
software assets. Labour costs are capitalised in the
period in which they are incurred and are directly
attributable to bringing the asset to the location and
condition necessary for it to be capable of operating
in the manner intended by management.
Increases in the carrying amount arising on revaluation of
land and buildings are credited to other comprehensive
income and shown as other reserves in shareholders’
equity. Decreases that offset previous increases of the
same asset are charged in other comprehensive income
and debited against other reserves directly in equity; all
other decreases are charged to the income statement.
Each year the difference between depreciation based on
the revalued carrying amount of the asset charged to the
income statement, and depreciation based on the asset’s
original cost is transferred from ‘other reserves’ to
‘retained earnings’.
Land is not depreciated and assets under construction
are not depreciated until the asset is ready for use.
Depreciation on other assets is calculated using the
straight-line method to allocate their cost or revalued
amounts to their residual values over their estimated
useful lives, as follows:
The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each reporting period.
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 (note 1(g)).
Gains and losses on disposals are determined by
comparing the proceeds with the carrying amount and
are recognised within expenses in the statement of
comprehensive income.
When revalued assets are sold, the amounts included in
other reserves are transferred to retained earnings.
(i)
Intangible assets
(i)
Goodwill
Goodwill arises on consolidation of the Waikato Networks
Group due to the acquisition of Ultrafast Fibre Limited
Buildings
35 years
Distribution network
6 – 70 years
Fibre network
5 – 40 years
Computer hardware
2 – 4 years
Plant and equipment
3 – 20 years
Motor vehicles
4 – 20 years
WEL NETWORKS LIMITED
Notes to the financial statements
For the year-ended 31 March 2017
(continued)
