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16 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost or
revalued amounts, net of their residual values, over their estimated useful lives as follows:
Class of asset depreciated
Estimated useful life
Computers
2 - 10 years
Farm buildings
50 years
Hotels (buildings)
50 - 100 years
Hotels (other assets)
3 - 33 years
Office equipment, furniture and fittings
1 - 17 years
Other buildings
100 years
Plant and equipment
1 - 14 years
Vehicles
2 - 11 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the
statement of comprehensive revenue and expense. When revalued assets are sold, it is the Trust’s policy to transfer the amounts
included in revaluation reserves in respect of those assets to retained earnings.
17 INVESTMENT PROPERTIES
Consolidated
Note
2016
$'000
2015
$'000
Balance at beginning of year
581,826
564,914
Development
2,014
13,078
Classified as held for sale or disposals
(180,456)
-
Net gain from fair value adjustment
5
30,365
8,007
Transfer to property, plant and equipment
16
(6,540)
(2,400)
Additions
-
-
Disposals
(20,208)
(1,773)
Balance at end of year
407,001
581,826
(a) Recognition and measurement
Investment properties include properties held to earn rental revenue, and/or for capital appreciation as well as investment
properties under construction. A property is also classified as an investment property if it does not have an operating lease in
place, but is held with the intention of attaining an operating lease.
Investment properties are initially recognised at cost, including transaction costs. Subsequent to initial recognition, investment
properties are carried at fair value, representing open market value determined annually by external valuers. Changes in fair
value are recorded in the statement of comprehensive revenue and expense.
(b) Valuation of investment properties
The significant methods and assumptions applied in estimating the fair value were:
• the direct comparison approach (based on analysis of sales of vacant property. This analysis includes determination of land
value, other improvements and residual value for principal improvements);
• the traditional capitalisation approach (focusing on the net maintainable revenue and the level of investment return);
WAIKATO RAUPATU LANDS TRUST
Notes to the financial statements
FOR THE YEAR ENDED 31 MARCH 2016