NOTES TO THE FINANCIAL STATEMENTS
Intellectual property costs Development costs for new intellectual property internally developed or acquired which have a benefit of more than one year have been capitalised. Such costs are expected to be recovered, and are amortised on a straight-line basis over the period of their expected useful lives, being three years.
Software All software purchased or created by WelTec and Group which have a benefit of more than one year have been capitalised. Such costs are expected to be recovered, and are amortised on a straight-line basis over the period of their expected useful lives, being three years.
Assets under construction Course development and software assets under construction are treated as an intangible asset until completion. Upon completion of a project, the total cost is transferred to the appropriate asset class, at which point amortisation begins.
Impairment of Property, Plant, and Equipment and Intangible Assets Assets that are not revalued are reviewed for indicators of impairment at each balance date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. All assets held by WelTec are cash generating units. When there is an indicator of impariment, the asset's recoverable amount is estimated. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a discount rate that reflects current market assessments of the time value of money. If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written-down to the recoverable amount with an impairment loss recognised in the profit or loss.
Payables Trade payables and other accounts payable are recognised when WelTec and Group becomes obliged to make future payments resulting from the purchase of goods and services.
Employee Benefits Employee benefits that are due to be settled within 12 months after the end of the period in which the employee renders the related service are measured at nominal values based on accrued entitlements at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned but not yet taken at balance date and sick leave.
A liability for sick leave is recognised to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the historical average amount of additional days used by staff to cover those future absences. A liability and an expense is recognised for bonuses, where there is a contractual obligation.
Long term employee entitlements Employee benefits that are due to be settled beyond 12 months after the end of the period in which the employee renders the related service, such as long service leave and retirement leave have been calculated on an actuarial basis. The calculations are based on: • •
Likely future entitlements accruing to staff, based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement, and contractual entitlement information; and The present value of the estimated future cash flows.
Expected future payments are discounted using the official cash rate. The inflation factor is based on the expected long-term increase in remuneration for employees.
Presentation of employee entitlements Sick leave, annual leave, long service leave and retirement leave expected to be settled within 12 months of balance date are classified as a current liability. All other employee entitlements are classified as a non-current liability.
Superannuation Schemes Defined contribution schemes such as employer contributions to KiwiSaver, the Government Superannuation Scheme and other such superannuation schemes are accounted for as defned contribution schemes and are recognised as an expense in the profit or loss when incurred.
Equity Equity, being the difference between total assets and total liabilities reflects the Crown’s interest in WelTec and Group. This public equity is disaggregated and classified into a number of reserves to enable clearer identification of the specific uses/sources of accumulated funds. The components of equity are: • Crown equity • Retained earnings • Reserves
Reserves WelTec and Group has an asset revaluation reserve which has been generated by the revaluation of plant, land and buildings, as outlined in the Property, Plant and Equipment policy.
Goods and Services Tax All items in the financial statements are stated exclusive of goods and services tax (GST), except for trade and other receivables and trade and other payables, which are presented on a GSTinclusive basis. Where GST is not recoverable as input tax then it is