Statement of Accounting Policies interest method. The difference between the face value and present value of any subsequent increase in fair value less costs to sell of an asset (or disposal the expected future cash flows of the loan is recognised in the surplus or deficit group), but not in excess of any cumulative impairment loss previously as a grant. recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de- Held-to-maturity investments recognition. Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities where there is a positive intention Non-current assets (including those that are part of a disposal group) are not and ability to hold to maturity. They are included in current assets, except for depreciated or amortised while they are classified as held for sale. Interest and maturities greater than 12 months after balance date, which are included in other expenses attributable to the liabilities of a disposal group classified as non-current assets. held for sale continue to be recognised. After initial recognition they are measured at amortised cost, using the effective Non-current assets classified as held for sale and the assets of a disposal interest method, less impairment. Gains and losses when the asset is impaired group classified as held for sale are presented separately from the other assets or derecognised are recognised in the surplus or deficit. in the Statement of Financial Position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the Impairment of Financial Assets Statement of Financial Position. Financial assets are assessed for objective evidence of impairment at each (xi) balance date. Impairment losses are recognised in the surplus or deficit. Property, Plant and Equipment Impairment is established when there is objective evidence that MDC will not Property, plant and equipment is shown at cost or valuation, less accumulated be able to collect amounts due according to the original terms of the debt. depreciation and any impairment losses. (ix) Inventories MDC has the following classes of property, plant and equipment: Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials, and, where applicable, direct labour costs and • Infrastructural assets. those overheads that have been incurred in bringing the inventories to their Operational assets. present location and condition. Cost is calculated using the weighted average • cost method. • Restricted assets. Net realisable value represents the estimated selling price less all estimated Infrastructural Assets costs of completion and costs to be incurred in marketing, selling and Infrastructural assets usually display some of all of the following characteristics: distribution. part of a system or network, specialised in nature and usually do not have alternative uses, immoveable and they may be subject to constraints on Provision has been made for obsolescence for inventories held for disposal. Examples are road networks, sewer systems and water systems. maintenance purposes, where applicable. Operational Assets (x) Non-current Assets Held for Sale Operational assets are acquired to enable the ongoing operations. Non-current assets (or disposal groups) classified as held for sale are stated at Restricted Assets the lower of their carrying amount and fair value less costs to sell if their Land and buildings in this category are subject to either restrictions on use, or carrying amount will be recovered principally through a sale transaction rather disposal, or both. This includes restrictions from legislation (such as land than through continuing use. The valuation of net realisable value was carried declared as a reserve under the Reserves Act 1977) or other restrictions (such out by Alexander Hayward Limited and Abel Properties Limited. as land or buildings under a bequest or donation that restricts the purpose for An impairment loss is recognised for any initial or subsequent write down of the which the assets can be used). asset (or disposal group) to fair value less costs to sell. A gain is recognised for 2018-2028 Long Term Plan Page 243