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Forest NSW Annual Report 2012

Notes to and forming part of the financial statements For the year ended 30 June 2012 (ii) Subsequent Costs mechanical workshops and other non-forest annual forest growth of the harvestable The cost of replacing part of an item of installations are carried at fair value. forest areas. As a result, all costs incurred in property, plant and equipment is recognised in Fair value is based on current market buying managing, maintaining and developing the the carrying amount of the item if it is probable price representing value in use. The Valuation timber resources are expensed as incurred on that the future economic benefits embodied Services supported this basis of valuation by the basis that all relevant costs are incurred in within the part will flow to Forests NSW and recognising that Forests NSW land was held for maintaining a constant forest resource. its cost can be measured reliably. The carrying continued use and by performing the valuation Forests NSW reports its biological assets at amount of the replaced part is derecognised. in accordance with NSW Treasury Policy Paper fair value less estimated point-of-sale costs. The costs of the regular servicing and TPP07-01: Valuation of Non-Current Assets at Fair value is the amount for which an asset maintenance of property, plant and Fair Value. could be exchanged or a liability settled, equipment are recognised in the Statement of between knowledgeable, willing parties in an Comprehensive Income as incurred. The valuation recognised areas that were arm’s length transaction. Point-of-sale costs currently utilised for timber producing include all costs that would be necessary to purposes and other areas such as reserves and (iii) Depreciation exclusion zones where no commercial activities sell the assets. Depreciation on property, plant and are carried out by Forests NSW. As there is no observable active and liquid equipment is recognised in the Statement of market for Forests NSW forest assets, Forests Comprehensive Income at rates which provide Roads & Bridges NSW has, in accordance with the provisions for the original cost or valuation to be written of AASB 141, adopted the Net Present Value down over the expected useful life of the asset. Major Roads and Bridges have been (NPV) methodology as the most appropriate Leased assets are depreciated over the shorter independently revalued by Valuation Services alternative for estimating the fair value of its of the lease term and the useful lives unless it is at 30 June 2012 on the basis of written down forest assets. reasonably certain that Forests NSW will obtain replacement cost, which approximates fair value. ownership by the end of the lease term. Land Costs of building or significantly upgraded Plantation Timber is not depreciated. Depreciation commences primary access roads (Class A) and secondary when assets are ready for use, even if standby access roads (Class B) are capitalised as Forests NSW manage approximately 235 000 assets (see Table 1). incurred. Maintenance costs on these higher (2011 – 234 236) hectares of softwood plantations and 33 000 (2011 – 28 452) hectares Depreciation methods, useful lives and residual classification roads are expensed as incurred. of hardwood plantations. The majority of values are reviewed at each reporting date. All other costs of maintaining and developing Forests NSW softwood plantation estates the rest of the roading infrastructure are comprise radiata pine, from the Highlands (i) Non-Current Asset Valuations expensed as incurred. to the west of the Great Dividing Range. Heavy Plant and Equipment, Motor Vehicles and The hardwood plantations consist mainly of Non-current assets are reviewed and assessed Mobile Plant endemic eucalypts and are predominately periodically at each reporting cycle to assess located on the NSW north coast. fair value and impairment. Heavy Plant and Equipment, Motor Vehicles and Mobile Plant are assessed at 30 June every Valuations for non-current assets were conducted financial year by management. The carrying Native Forest Timber by the Land and Property Information (Valuation value as at 30 June 2012 approximates fair Forests NSW manages approximately 1.9million Services), covering land, roads, and non forests value. (2011 – 1.9million) hectares of native forests. installations for 30 June 2012. Native forests are predominantly coastal Valuations for non-current assets are carried (ii) Biological Assets eucalypt forests and smaller areas of red gum in out at least every 5 years, or earlier if significant the state’s south-west and cypress pine in the movements in the market values of assets are Under AASB 141 Agriculture, a biological asset state’s central west. detected. is defined as ‘a living animal or plant’. Forests NSW assets falling into this category consist of Valuation of Biological Assets (i) Property, Plant & Equipment plantation timber (softwood and hardwood) and native forest timber. The Net Present Value (NPV) methodology Land Forests NSW manage available forest areas NPV is calculated as the net of the future cash All land, being Crown Land and Forests NSW on a sustainable yield basis. Sustainable inflows and outflows associated with forest owned land, under forests and plantations yield means that the volume harvested will production activities discounted back to and under administrative buildings, offices, approximate, over long-term harvest cycles, current values at the specified pre-tax Weighted Average Cost of Capital (WACC). Under the NPV methodology, valuation Table 1: The estimated useful lives for the current and comparative years are as follows: changes mainly arise from: Type of asset Depreciation Method Useful Life Changes in timber volume associated with Property (other than Land) Straight Line 10 to 50 years growth and also changes to the overall Other Plant and Equipment Straight Line 3 to 50 years estate as a result of annual planting and Roads and Bridges harvesting activity; • earthworks Straight Line 50 years Changes in timber prices; • paving Straight Line 15 to 30 years Changes in forest production costs; and Forests NSW Annual Report 2011–12 Social, Environmental and Economic Performance 59


Forest NSW Annual Report 2012
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