Vector AR’19 ― notes to the financial statements (continued)
14. Property, plant and equipment (PPE) CONTINUED Policies
PPE is initially measured at cost, and subsequently stated at cost less depreciation and any impairment losses. Cost may include: —— Consideration paid on acquisition —— Costs to bring the asset to working condition —— Materials used in construction —— Direct labour attributable to the item —— Interest costs attributable to the item —— A proportion of directly attributable overheads incurred —— If there is a future obligation to dismantle and/or remove the item, the costs of doing so Capitalisation of costs stops when the asset is ready for use. Subsequent expenditure that increases the economic benefits derived from the asset is capitalised. Uninstalled assets are stated at the lower of cost and estimated recoverable amount. Depreciation commences when an asset becomes available for use. Depreciation of PPE, other than freehold land and capital work in progress, is calculated on a straight-line basis and expensed over the useful life of the asset. Useful lives are reviewed regularly and adjusted as appropriate for the revised expectations. Estimated useful lives (years) are as follows: Buildings 40 – 100 Meters and meter inspections 2 – 40 Distribution systems 5 – 100 Other plant and equipment 3 – 55 Leasehold improvements 5 – 20 Management must apply judgement when evaluating: —— Whether costs relate to bringing the items to working condition —— The amount of overhead costs which can be reasonably directly attributed to the construction or acquisition of an asset —— Whether subsequent expenditure on the asset increases the future economic benefits to be obtained from that asset —— Whether any indicators of impairment have occurred which might require impairment testing of the current carrying values
Judgements
Capital commitments
The estimated capital expenditure for PPE and software intangibles contracted for at balance date but not provided is $83.4 million for the group (2018: $68.0 million).
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