Notes to the financial statements (continued) Section 3: Operational assets and liabilities (continued) 11. Property, plant and equipment, and intangible assets (continued)
12. Right-of-use assets
A. Accounting policy i. Cost
Right-of-use assets represent leased fleet and other equipment (including properties and information technology) required for the operation of the business. They are recognised at the commencement dates of the leases, at historical cost less accumulated depreciation and any accumulated impairment losses, adjusted for lease liability re-measurements. Historical cost is measured at the amount of the initial lease liability, plus any: • lease payments made at, or before the commencement date less any lease incentives received • initial direct costs • restoration costs including dismantling and removing the underlying asset. ii. Depreciation In order to recognise the loss of service potential, right-of-use assets are depreciated on a straight-line basis over the shorter of the asset’s estimated useful life and the lease term, per below. See table 22. Where Western Power is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. iii. Impairment Refer to note 11(c) for details of Western Power’s ‘Impairment of non-financial assets’ accounting policy.
G. Critical accounting estimates and judgements: depreciation and amortisation (including right-of- use assets) Western Power reviews the depreciation and amortisation methods of property, plant and equipment, intangible assets and right-of-use assets at least annually in accordance with the accounting policies in notes 11(a)(ii), 11(b)(ii) and 12(a)(ii) respectively. This involves estimates and judgements associated with residual values and estimated useful lives, taking into account such factors as commercial and technical obsolescence, as well as normal wear and tear. As at 30 June 2025, Western Power did not recognise any changes in depreciation and amortisation estimates (30 June 2024: nil). H. Critical accounting estimates and judgements: impairment of non-financial assets (including right-of-use assets) Western Power assesses the impairment of property, plant and equipment, intangible assets and right-of-use assets at least annually in accordance with the accounting policy in note 11(c). This involves evaluating impairment indicators specific to Western Power and/or the particular non-financial asset or CGU. Indicators include significant change in market, technological, economic, legal and/or climate related events; obsolescence or physical damage. In 2025, the impairment loss of $25 million represented the write-down of certain property, plant and equipment in the buildings asset class as a result of significant water damage (30 June 2024: no indicators). This was recognised in the statement of comprehensive income as other expenses. The recoverable amount was based on fair value less cost to dispose for the asset.
Table 22: Depreciation Class of right-of-use assets
Years 2 - 7.5 5 - 40
Fleet Other equipment
Western Power Annual Report 2025
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