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Wool Stocktake : Annual Report 2006-07
NOTES TO THE FINANCIAL REpORT ( CONTINUED) classiﬁed as available-for-sale, a signiﬁcant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale ﬁnancial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that ﬁnancial asset previously recognised in proﬁt or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments classiﬁed as available-for-sale are not reversed through the income statement. C(7) Depreciation of property, plant and equipment Depreciation is calculated on a straight line basis to write off the net cost or re-valued amount of each item of property, plant and equipment (excluding land) over its expected useful life to the economic entity. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. The expected useful lives are as follows: Category Useful life Depreciation basis Buildings 40 years straight line Furniture, ﬁttings and equipments 2–6 years straight line Land is not depreciated. All assets are stated at historical cost, less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash ﬂow hedges of foreign currency purchases of property, plant and equipment. 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. All other repairs and maintenance are charged to the income statement during the ﬁnancial period in which they are incurred. C(8) Leasehold improvements The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the consolidated entity, whichever is the shorter. C(9) Livestock Livestock are carried on the balance sheet at the lower of cost and net realisable value. Costs of purchased livestock are determined after deducting rebates and discounts. note 1. summary of signiﬁcant accounting policies (continued) Recognition and derecognition Regular purchases and sales of ﬁnancial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all ﬁnancial assets not carried at fair value through proﬁt or loss. Financial assets carried at fair value through proﬁt and loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash ﬂows from the ﬁnancial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When securities classiﬁed as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities. Subsequent measurement Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Available-for-sale ﬁnancial assets and ﬁnancial assets at fair value through proﬁt and loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the ‘ﬁnancial assets at fair value through proﬁt or loss’ category are presented in the income statement within other income or other expenses in the period in which they arise. Dividend income from ﬁnancial assets at fair value through proﬁt and loss is recognised in the income statement as part of revenue from continuing operations when the Group’s right to receive payments is established. Fair value The fair values of quoted investments are based on current bid prices. If the market for a ﬁnancial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash ﬂow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-speciﬁc inputs. Impairment The Group assesses at each balance date whether there is objective evidence that a ﬁnancial asset or group of ﬁnancial assets is impaired. In the case of equity securities
AWI Annual Report 2007-08