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Notes to the Financial Statements

For the year ended 30 June 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f) Investments in associates (continued)

cost relating to the actual draw-down of the facility, are

recognised as prepayments and amortised on a straight-line basis over the term of the facility.

The Consolidated Entity’s share of an associate’s post- acquisition profits or losses is recognised in the Income Statement, and its share of post-acquisition movements in reserves is recognised in the reserves. The cumulative post-

acquisition movements are amount of the investment. associates are recognised in

adjusted against the carrying Dividends receivable from the Income Statement, while in

the Balance Sheet they have amount of the investment.

the

effect

of

reducing

the

carrying

If the Consolidated Entity’s share of losses in an associate equals or exceeds its interest in the associate, including any

unsecured long-term receivables and loans, the Consolidated Entity does not recognise any further losses, unless it has incurred obligations or made payments on behalf of the associate.

A condition of the main banking facilities (refer to note 24(a)) is that the Consolidated Entity manages interest rate risk by entering into interest rate derivative contracts. To the extent that borrowings under the main banking facilities relate to qualifying assets, the net cost payable under these derivative contracts is capitalised to the cost of the underlying assets.

Borrowing costs are recognised as an expense when incurred unless they relate to a qualifying asset. A qualifying asset is an asset which generally takes more than twelve months of construction or development to get it ready for its intended use or sale. In these circumstances, the borrowing costs are capitalised to the cost of the asset. Where funds are borrowed by the Consolidated Entity for the acquisition or development of a qualifying asset, the amount of borrowing costs capitalised

are those incurred in relation to that borrowing.

The reporting dates of the associate and the Consolidated Entity are identical and the associate’s accounting policies conform to those used by the Consolidated Entity for like transactions and events in similar circumstances.

g) Propert , plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on a straight-line basis over the estimated useful life of the specific assets as follows:

Plant, equipment, and motor vehicles Motor vehicles (held under finance lease) Leasehold improvements

3-7 years 2-3 years 3-10 years

The assets’ residual values, useful lives and amortisation m e t h o d s a r e r e v i e w e d , a n d a d j u s t e d i f a p p r o p r i a t e , a t e a c h

financial year-end.

Derecognition

An item of property, plant and equipment is derecognised

i) Intangible assets Intangible assets acquired separately or i

n a business

combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its fair value as at the date of the acquisition. Following initial recognition, intangible assets are carried at cost less any

accumulated amortisation and any accumulated impairment

losses. The Consolidated expenditure resulting in the intangible assets.

Entity does not capitalise any creation of internally generated

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the expected useful life of the asset and tested for impairment whenever there is an indication that the asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by prospectively changing the amortisation period or method,

upon disposal or when no further future economic benefits are expected from its use or disposal.

h) Borrowing costs

as appropriate, which is a change in accounting estimate. The

amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

Borrowing costs include interest, discounts or premiums relating to borrowings, and other costs incurred in connection

At the reporting date, the Consolidated Entity had no intangible assets with indefinite useful lives.

with the arrangement of borrowings. Fees paid on the establishment of loan facilities, which are not an incremental

32 AVJennings Limited ABN 44 004 327 771

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