Queensland Art Gallery Annual Report 2006-07

appendixes / QUEENSLAND ART GALLERY ANNUAL REPORT 06–07 75 registered booksellers, new and second hand, to list their available stock. Plant and equipment are measured at cost. The carrying amounts for plant and equipment at cost should not materially differ from their fair value. Any revaluation increment arising on the revaluation of an asset is credited to the asset revaluation reserve of the appropriate class, except to the extent it reverses a revaluation decrement for the class previously recognised as an expense. A decrease in the carrying amount on revaluation is charged as an expense, to the extent it exceeds the balance, if any, in the revaluation reserve relating to that class. Separately identified components of assets are measured on the same basis as the assets to which they relate. (l) Depreciation of Property, Plant and Equipment Plant and equipment is depreciated on a straight-line basis so as to allocate the net cost or revalued amount of each asset, less its estimated residual value, progressively over its estimated useful life to the Gallery. The Gallery's Art Works and the Gallery Library's Heritage Collection are not depreciated due to the heritage and cultural nature of the assets. Where assets have separately identifiable components that are subject to regular replacement, these components are assigned useful lives distinct from the asset to which they relate and are depreciated accordingly. Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining useful life of the asset to the Gallery. For each class of depreciable asset the following depreciation rates were used: Class Rate % Plant and Equipment Computers 30 Motor vehicles 25 Printers 20 Other 10 (m) Impairment of Non-Current Assets The Gallery is not primarily dependent on its assets' ability to generate net cash flows and therefore, if deprived of the asset, the Gallery would replace the asset's remaining future economic benefits. The value in use is the depreciated replacement cost of the asset. All non-current physical assets are assessed for indicators of impairment on an annual basis. If an indicator of possible impairment exists, the Gallery determines the asset's recoverable amount. Any amount by which the asset's carrying amount exceeds the recoverable amount is recorded as an impairment loss. The asset's recoverable amount is determined as the higher of the asset's fair value less costs to sell and depreciated replacement cost. An impairment loss is recognised immediately in the Income Statement, unless the asset is carried at a revalued amount. When an asset is measured at a revalued amount, the impairment loss is offset against the asset revaluation reserve of the relevant class to the extent available. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase (Note 1(k)). (n) Leases Operating lease payments are representative of the patterns of benefits derived from the leased assets and are expensed in the periods in which they are incurred. The Arts Legislation Amendment Act 1997 transferred the assets and liabilities of the Queensland Cultural Centre Trust (QCCT) that was abolished in December 1997 to the State of Queensland, and the Corporate Administration Agency (CAA) became the manager of the Cultural Centre precinct. The Art Gallery Board of Trustees has a signed lease agreement with the former QCCT for the main Art Gallery building located within the Cultural Centre precinct for which no rent is charged. The lease has been assumed by the State of Queensland (Section 85 (2) of the Act). The provision of the building and items of fit-out, including plant and equipment, form part of this agreement. The Gallery pays for services including building maintenance and repairs, electricity, security, cleaning, airconditioning and telephone rental (Note 1(u)). (o) Other Financial Assets Current assets include investments with short periods to maturity that are readily convertible to cash on hand at the Gallery's option and that are subject to a low risk of changes in value. Included in the non-current assets of the Queensland Art Gallery Foundation are State Government Contributions and retained donations of $7.6 million. These funds are restricted as per an agreement with the State Government which states that only the interest derived from these funds can be used by the Foundation for acquisitions or the exhibition program of the Gallery. The Foundation's other non-current investments are carried at market value. Changes in market value are recognised as a revenue or expense in determining the net result for the period. All other non-current investments are carried at the lower of cost and recoverable amount. Interest and dividend revenues are recognised on an accrual basis. (p) Payables Trade creditors are recognised upon receipt of the goods or services ordered and are measured at the agreed purchase/contract price, gross of applicable trade and other discounts. Amounts owing are unsecured and are generally settled on 30 day terms. (q) Other Financial Liabilities Interest bearing liabilities are recognised at book value as the amount contractually owing. All borrowing costs are accounted for on an accrual basis in the income