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53
APN
annual report
2011
notes to the financial statements
APN News & Media Limited and Controlled Entities
(i) Fair value hedges
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges are recorded in profit or loss, together
with any changes in the fair value of the hedged asset or liability
that are attributable to the hedged risk.
(ii) Cash flow hedges
The effective portion of changes in the fair value of derivatives
that are designated and qualify as cash flow hedges is recognised
in other comprehensive income and accumulated in the hedging
reserve in equity. The gain or loss relating to the ineffective portion
is recognised in profit or loss in other income or other expenses.
Amounts accumulated in equity are reclassified to profit or loss in the
periods when the hedged item affects profit or loss (for instance when
the forecast sale that is hedged takes place). The gain or loss relating
to the effective portion of interest rate swaps hedging variable rate
borrowings is recognised in profit or loss within finance costs. The gain
or loss relating to the effective portion of forward foreign exchange
contracts is recognised in profit or loss within other income.
When a hedging instrument expires or is sold or terminated, or
when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at that time remains in
equity and is recognised when the forecast transaction is ultimately
recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to profit or loss.
(iii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting.
Changes in the fair value of any derivative instrument that does not
qualify for hedge accounting are recognised in profit or loss.
(p) Property, plant and equipment
Land and buildings are shown at fair value, based on periodic
valuations by external independent valuers, less subsequent
depreciation for buildings. Any accumulated depreciation at the
date of revaluation is eliminated against the gross carrying amount
of the asset and the net amount is restated to the revalued amount
of the asset. Plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Cost may also include
transfers from equity of any gains/losses on qualifying cash flow
hedges of foreign currency purchases of property, plant and
equipment. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Increases in the carrying amounts arising on revaluation of land and
buildings are credited to revaluation reserves in equity. To the extent
that the increase reverses a decrease previously recognised in the
income statement, the increase is first recognised in the income
statement. Decreases that reverse previous increases of the same
asset are first charged against revaluation reserves directly in equity
to the extent of the remaining reserve attributable to the asset; all
other decreases are charged to the income statement.
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:
–
–
buildings
50 years
–
–
plant and equipment
3–25 years
The assets’ residual values and useful lives are reviewed and adjusted,
if appropriate, at each balance sheet date. An asset’s carrying
amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable
amount (refer note 1(i)). Gains and losses on disposals are determined
by comparing proceeds with carrying amount. These are included in
profit or loss.
(q) Intangible assets
(i) Goodwill
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group’s share of the net identifiable assets
of the acquired business at the date of acquisition. Goodwill
on acquisition of subsidiaries is included in intangible assets.
Goodwill on acquisition of associates is included in investments
in associates. Goodwill is not amortised but rather is subject to
periodic impairment testing as described in note 1(i).
(ii) Software
Costs incurred in developing systems and costs incurred in acquiring
software and licences are capitalised to software. Costs capitalised
include external direct costs of materials and service and direct
payroll and payroll related costs of employees’ time spent on the
project. Amortisation is calculated in a straight line basis over periods
generally ranging from 3 to 5 years.
(iii) Mastheads
Mastheads, being the titles of the newspapers and magazines
produced by the consolidated entity, are accounted for as identifiable
assets and are brought to account at cost. The Directors believe the
mastheads have indefinite lives and accordingly, no amortisation has
been provided against the carrying amount.
Australian Accounting Standards state explicitly that an active market
does not exist in respect of newspaper mastheads, brands and other
assets as such assets are unique. The Board of Directors does not
agree that an active market does not exist in respect of newspaper
mastheads; however, it has complied with the requirements of the
relevant standard to reverse all past revaluation of such assets.
(iv) Radio licences – Australia
Commercial radio licences are accounted for as identifiable assets
and are brought to account at cost. The Directors believe the
licences have indefinite lives and accordingly, no amortisation has
been provided against the carrying amount. The commercial radio
licences held by the consolidated entity are renewable every five
years under the provisions of the
Broadcasting Services Act 1992
and
the Directors have no reason to believe that the licences will not be
renewed from time to time for the maximum period allowable under
the Act and without imposition of any conditions.
(v) Radio licences – New Zealand
Commercial radio licences are accounted for as identifiable assets
and are brought to account at cost. The current New Zealand
radio licences have been renewed to 31 March 2031 and are being
amortised on a straight line basis to that date.