Statement of Accounting Policies development of software for internal use by MDC are recognised as an Where an impairment loss subsequently reverses the carrying amount of the intangible asset. Direct costs include the software development employee costs asset (or cash-generating unit) is increased to the revised estimate of its and an appropriate portion of relevant overhead costs. Staff training costs, recoverable amount, but so that the increased carrying amount does not maintenance and web related costs are recognised in the surplus or deficit exceed the carrying amount that would have been determined had no when incurred. impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as revenue immediately Amortisation unless the relevant asset is carried at a revalued amount, in which case the The carrying value of an intangible asset with a finite life is amortised on a reversal of the impairment loss is treated as a revaluation increase to the extent straight-line basis over its useful life. that any impairment loss had been previously charged to equity. Amortisation begins when the asset is available for use and ceases at the date Forestry Assets that the asset is derecognised. The amortisation charge for each financial year Forestry assets are owned and managed by Marlborough Regional Forestry. is recognised in the surplus or deficit. They are stated at fair value less costs to sell for one growing cycle, with any resultant gain or loss recognised in the surplus or deficit. Sale costs include all The useful lives and associated amortisation rates of major classes of costs that would be necessary to sell the assets, excluding costs necessary to intangible assets have been estimated as follows: get the assets to market. Computer software 3 to 5 years 20% to 33.3%. The fair value of all trees is based on estate based Net Present Value (NPV) method, using the present value of future cash flows discounted at a pre-tax (xiii) Impairment of Property, Plant and Equipment and Intangible market determined rate. Assets Council owns and manage some trees for soil conservation purposes. These At each balance sheet date MDC reviews the carrying amounts of its tangible are revalued as per Council’s policy on property, plant and equipment. and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists and for (xiv) Investment Property indefinite life intangibles, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not Properties leased to third parties under operating leases are classified as possible to estimate the recoverable amount of an individual asset, estimates investment property unless the property is held to meet service delivery are made of the recoverable amount of the cash generating unit to which the objectives, rather than to earn rentals or for capital appreciation. asset belongs. Investment property is measured initially at its cost, including transaction costs. Recoverable amount is the greater of market value less costs to sell and value in use. After initial recognition, all investment property is measured at fair value at each reporting date. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount the carrying amount of the asset (or cash- Gains or losses arising from a change in the fair value of investment property generating unit) is reduced to its recoverable amount with the expense being are recognised in the surplus or deficit. recognised in the Statement of Comprehensive Revenue and Expense. (xv) Trade and Other Payables For non-revalued assets impairment losses are recognised as an expense Trade and other payables are non-interest bearing and are normally settled on immediately. 30 day terms, therefore the carrying value of creditors and other payables approximates their fair value. For revalued assets, other than investment property, the impairment loss is treated as a revaluation decrease to the extent it reverses previous accumulated revaluation increments for that asset class. 2018-2028 Long Term Plan Page 245