Statement of Accounting Policies Special reserves are a component of equity generally representing a particular In order to hedge its exposure to certain foreign exchange risks, MDC enters use to which various parts of equity have been assigned. Reserves may be into forward contracts in accordance with the Council treasury policies (see legally restricted or created by Council. above for details of MDC’s accounting policies in respect of such derivative financial instruments). Restricted reserves are those reserves subject to specific conditions accepted as binding by the Council and which may not be revised by Council without (xxiv) Annual Plan Figures reference to the Courts or a third party. Transfer from these reserves can be The comparative 2017-18 figures are those approved by the Council in its made by certain specified purposes or when certain specified conditions are 2017-18 Annual Plan. They have been prepared in accordance with NZ GAAP, met. using accounting policies that are consistent with those adopted in preparing these financial statements. Council created reserves are reserves established by Council decision. The Council may alter the purpose of the reserve without reference to any third (xxv) Emissions Trading Scheme (ETS) party or the Courts. Transfer to and from these reserves is at the discretion of Marlborough Regional Forestry (MRF) is a participant in the ETS with regard to Council. both its significant holdings of “pre 1990” forests and currently minor holding of Property revaluation reserves relate to the revaluation of property, plant and “post 1989” forests. equipment to fair value. Pre 1990 emission units (NZU’s) received are recognised at fair value and (xxi) Goods and Services Tax subsequently measured at cost subject to impairment.It is not anticipated that MRF will have any future liabilities or obligations with regard to its pre 1990 All items in the financial statements are stated exclusive of goods and services forests. tax (GST), except for debtors and other receivables and creditors and other payables, which are presented on a GST-inclusive basis. GST not recoverable Post 1989 NZU’s received are recognised at cost ($nil) and subsequently as input tax is recognised as part of the related asset or expense. measured at cost subject to impairment. Where there is an obligation to return units the expense and liability are recognised and are measured at the carrying The net amount of GST recoverable from, or payable to, the Inland Revenue value of units on hand plus the fair value of any additional units required. If Department (IRD) is included as part of receivables or payables. operations proceed as planned there will always be post 1989 units on hand equal to any liability. The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the Any future cash flows associated with units receivable/payable will be taken Statement of Cash Flows. Commitments and contingencies are disclosed into consideration in determining the valuation of the forest estate. exclusive of GST. Council’s regional landfill has entered the ETS and has incurred liabilities from (xxii) Cost Allocation 1 January 2013. NZU’s purchased to meet these liabilities are recognised at The cost of providing support services for the Council are accumulated and are cost and subsequently recognised at cost subject to impairment. Where there allocated to each activity using appropriate allocation bases which reflect the is an obligation to return units the expense and liability are recognised and are usage and /or capacity for each significant activity. measured at the carrying value of units on hand plus the fair value of any additional units required. (xxiii) Foreign Currencies Transactions in foreign currencies are initially recorded at the rates of exchange prevailing on the dates of the transactions or rates that approximate those rates. Monetary assets and liabilities denominated in such currencies are retranslated at the rates prevailing on the balance sheet date. Profits and losses arising on exchange are included in the surplus or deficit for the period. 2018-2028 Long Term Plan Page 247