Annual Report 2021–2022, Power and Water Corporation
Tabled Paper 708
Tabled Papers for 14th Assembly 2020 -; Tabled Papers; ParliamentNT
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Legislative Assembly of the Northern Territory
Legislative Assembly of the Northern Territory
Annual Report 2021-2022 85 Page 34 of 60 Power and Water Corporation Notes to the financial statements for the year ended 30 June 2022 2.5 Critical accounting judgements and key sources of estimation uncertainty (cont'd) Capitalisation of expenses (i) Borrowing costs (ii) Labour recovery costs (iii) Indirect costs supporting capital projects The impact of this revised estimation process on the comparative period is stated below: FFiinnaanncciiaall ssttaatteemmeenntt lliinnee iitteemmss FFYY2211 $$''000000 aass pprreevviioouussllyy ddiisscclloosseedd IImmppaacctt ooff uuppddaatteedd mmeetthhooddoollooggyy FFYY2211 $$''000000 aaddjjuusstteedd Impairment expense 5,139 (19,865) (14,726) Other operational expenses (583,602) 53,112 (530,490) Net profit/(loss) before tax (28,928) 33,247 4,319 Tax expense (631) (5,989) (6,620) Net profit/(loss) after tax (28,297) 27,258 (1,039) Other comprehensive income 49,172 (13,974) 35,198 Property, plant and equipment 2,967,915 13,284 2,981,199 Payments to suppliers and employees (656,265) 53,112 (603,153) Payments for property, plant and equipment (111,947) (53,112) (165,059) 20,875 13,284 34,159 Total impact to statement of financial position 1,513,427 13,284 1,526,711 25,095 - 25,095 FFiinnaanncciiaall ssttaatteemmeenntt lliinnee iitteemmss FFYY2211 $$''000000 aass pprreevviioouussllyy ddiisscclloosseedd IImmppaacctt ooff uuppddaatteedd mmeetthhooddoollooggyy FFYY2211 $$''000000 aaddjjuusstteedd Impairment expense (1,940) (19,865) (21,805) Other operational expenses (517,441) 39,828 (477,613) Net profit/(loss) before tax (7,786) 19,963 12,177 Tax expense (631) (5,989) (6,620) Net profit/(loss) after tax (7,155) 13,974 6,819 Other comprehensive income 49,172 (13,974) 35,198 Property, plant and equipment 2,336,489 - 2,336,489 Payments to suppliers and employees (569,382) 39,828 (529,554) Payments for property, plant and equipment (81,565) (39,828) (121,393) 42,017 - 42,017 Total impact to statement of financial position 1,238,099 - 1,238,099 14,701 - 14,701 Subsequent to initial recognition, land, buildings and infrastructure assets are held at fair value and are revalued using the income approach in accordance with AASB 116 Property, Plant and Equipment and AASB 13 Fair Value Measurement. Therefore, the estimated impact to the Corporations total comprehensive income for the comparative period is nil. The subsidiary entity uses the current replacement cost approach to determine the fair value of infrastructure assets. If the change in estimate methodology described here had been applied to the subsidiary entity in the prior reporting period, there would have been an estimated impact on the consolidated entitys total comprehensive income for the comparative period of approximately $13 million. Whilst a change in estimate requires prospective reporting, this comparative impact has been voluntarily disclosed to assist users of the financial statements analyse year on year comparisons. Total impact to net increase/(decrease) in cash and cash equivalents Total impact to net increase/(decrease) in cash and cash equivalents Consolidated Total impact to statement of profit or loss and other comprehensive income Corporation Total impact to statement of profit or loss and other comprehensive income During the current year, the consolidated entity capitalised a number of expenses as follows: The consolidated entity has revised the estimation methodology to identify support costs included in Corporate Services, Power Services and Water Services which are directly attributable to the acquisition, preparation or construction of capital assets for use by management. The financial effect of this change in estimate is a reduction in the expenses recognised in the statement of profit or loss and is noteworthy when compared with the comparative period. As this is a change in estimation method, the impact has been shown prospectively in the financial statements. However, to assist users of the financial statements in analysing year on year impact, the consolidated entity has voluntarily disclosed the estimated effect of the change in estimate had it been applied to the reporting period immediately prior (30 June 2021). Each year the consolidated entity capitalises through timesheeting the portion of employee expenses that are attributable to the construction of an asset. The consolidated entity has determined the labour recovery attributable to the construction of assets each year with the impact of this being a reduction in the total employee expenses recognised in the statement of profit or loss. As described in Note 2.3 (f) and Note 2.5, borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. To the extent that the funds are borrowed generally and used for the purpose of obtaining or constructing a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate to the expenditure on that asset. The average carrying amount of the asset during the period, including borrowing costs previously capitalised, is used as the basis for determining expenditures to which the capitalisation rate is applied in that period. Therefore, the consolidated entity has estimated the amount of borrowing costs to be capitalised at the end of each reporting period.
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