Financial statements
Section B: Notes to the Group financial statements for the year ended 30 June 2024
Section B: Notes to the Group financial statements for the year ended 30 June 2024
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Other intangible assets (continued)
Intangible asset model Concession intangible assets accounting policy Concession assets that do not meet the criteria of the financial asset model are classified as intangible assets and are amortised on a straight- line basis over the term of the concession arrangement. Transurban has the right to toll and operate the concession assets for the concession period. Extensions to the concession period have been granted for a number of individual concessions as a result of road development projects and improvements. At the end of the concession period, all concession assets are to be returned to the respective government. The remaining periods the Group has the right to toll and operate the concession assets are shown below: 2024 2023 Years Years Melbourne—Victorian State Government 21 22 Sydney—New South Wales State Government 1 2–24 3–25 Brisbane—Queensland State Government and Brisbane City Council 27–41 28–42
1. The concession end date for M5 West is December 2026 at which point it will form part of the WestConnex M8/M5 East concession. There were no indicators of impairment for the Group’s concession intangible assets as at 30 June 2024.
KEY ACCOUNTING ESTIMATE AND JUDGEMENT For the purpose of impairment testing, for the Melbourne operating segment, management have determined that the lowest level where there is an identifiable group of assets, that has separately identifiable cash inflows that are largely independent from other assets or group of assets, is the combined concession intangible assets of CityLink and West Gate Tunnel (CGU). Any identified indicator of impairment would require impairment testing at this CGU level. For a majority of the Group's remaining concession intangible assets, impairment testing has been undertaken at the individual concession intangible asset level. Impairment testing is undertaken by calculating the recoverable amount, based on the higher of fair value less costs of disposal and value-in-use, estimated using discounted cash flows. The calculation requires the use of assumptions regarding traffic flows, discount rates, growth rates and other factors affecting operating activities of the CGU. Management have concluded that there are no indicators of impairment for the concession intangible assets of the CityLink and West Gate Tunnel CGU as at 30 June 2024. Assets under construction Assets under construction as at 30 June 2024 include the construction of the West Gate Tunnel Project in Melbourne, which is accounted for under the intangible asset model. Assets under construction accounting policy Assets under construction are accounted for as contract assets. Assets under construction are initially measured at the fair value of consideration received for the construction services delivered. Fair value is measured by reference to the stand-alone selling price (SSP) of the construction services provided. The SSP is determined using the expected cost plus a margin approach, which includes all expected costs of satisfying the construction services performance obligation, including additional elements that a market participant would use (including project management costs and borrowing costs). Construction costs relating to completed works are transferred to concession intangible assets upon final completion of the project. For the purposes of impairment testing, the Group applies the simplified approach to measuring expected credit losses which uses a lifetime of expected loss allowance for all contract assets.
Management considers the carrying amount of assets under construction to be appropriate as at 30 June 2024.
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