58
2 SUMMARY OF GENERAL ACCOUNTING POLICIES (CONTINUED)
ii) Fair value of assets and liabilities
The Trust records certain assets and liabilities at fair value in the statement of financial position as follows:
Farm and owner occupied properties (note 16), investment properties (note 17) and Te Wherowhero title properties (note
18) are stated at fair value. The fair values have been determined by independent valuers as at 31 March 2016 and 31 March
2015 using a mixture of market evidence of transactional prices for similar properties, direct comparison, capitalisation and
discounted cash flow approaches.
Biological assets (note 11) comprise livestock and forests. Both are fair valued by independent valuers using current market
prices less point of sale costs (livestock) and expectation value method less point of sale costs (forests).
Other financial assets that have been designated as held at fair value through surplus or defict (note 14) include shares in
listed and unlisted companies held at fair value. The fair value of shares in unlisted companies, in the absence of quoted
prices, has been determined using valuation techniques.
Interest rate swaps (note 20) are valued using discounted cash flow techniques.
The determination of fair value for each of the assets and liabilities above requires significant estimation and judgement
which have a material impact on the statement of comprehensive revenue and expense and statement of financial position.
Non-current assets Held for Sale (note 12) comprise of investment properties, property plant and equipment, and lease
incentives associated with 50 percent of The Base. The fair value has been determined using the sale price as a key input to
the valuation.
(iii) Impairment testing
Intangible assets with indefinite useful lives (note 15) are required to be tested for impairment at least annually. This requires
an estimation of the recoverable amount of the quota based on the higher of value in use or fair value less costs to sell. The
determination of the recoverable amount of the quota requires significant estimation and judgement.
2.2 Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to
complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.
2.3 Current and deferred income tax
The Inland Revenue Department approved the Trust as charitable for the purposes of the Income Tax Act 1994.
However, some entities within the Trust are taxable. In the instances where an entity is taxable, current tax is calculated by using
tax rates and tax laws that have been enacted or substantively enacted by the reporting date. Accordingly, no tax is payable by
the Trust. See note 26 for details of entities that have charitable status.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries except
for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Trust and it is
probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax in respect of property, plant and equipment had been assessed in 2014 on the basis of the asset value being
realised through sale. This has been reversed in 2015 (see note 7).
2.4 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to
an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in
the statement of financial position.
WAIKATO RAUPATU LANDS TRUST
Notes to the financial statements
FOR THE YEAR ENDED 31 MARCH 2016