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| Note 1. Significant accounting policies |
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| The significant policies, which have been adopted in the preparation of this Financial Report, are: |
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| k) |
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| a) Basis of Preparation |
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| The financial report has been prepared on the going concern basis and historical costs, except where otherwise stated, and accrual accounting principles. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year. Where appropriate, comparative figures have been amended to accord with current presentation and disclosure made of material changes to comparatives. |
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| b) Principles of Consolidation |
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The consolidated results in the financial report include all funds through which the Melbourne City Council controls resources to carry on its functions. In the process of reporting on the Melbourne City Council as a consolidated unit, all intra and inter entity balances and transactions have been eliminated.
CityWide Service Solutions Pty Ltd, Queen Victoria Market Pty Ltd and Melbourne Wholesale Fish Market Pty Ltd are all wholly owned subsidiaries of the council incorporated in Australia and are included in the consolidated financial report.
The Sustainable Melbourne Fund Trust is a wholly controlled trust of the council and is included in the consolidated financial report.
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| c) Taxation |
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Melbourne City Council is exempt from the payment of income tax and capital gains tax. Payments for Fringe Benefits Tax and Goods and Services Tax (GST) are made in accordance with the relevant legislation. Payments for payroll tax are only made by the trading entities controlled by the Melbourne City Council.
The wholly owned subsidiaries are subject to the Melbourne City Council's tax equivalence policy. Where the subsidiary is exempt from certain taxes it pays an equivalence of the tax to Melbourne City Council.
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
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| d) Fees, Fines, Charges, Rates, Grants and other Contributions |
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Fees and charges are recognised as revenue when services are provided or the cash is received, whichever occurs first.
Fines are recognised as revenue when the penalty is imposed.
Rates, grants, and other contributions are recognised as revenues when Melbourne City Council obtains control over the related assets. Control over assets acquired from rates is obtained at the commencement of the rating period or, where earlier, upon receipt of the rates. Control over granted assets is normally obtained upon their receipt or upon prior written notification that a grant has been secured.
Where contributions recognised as revenues during the financial year were obtained on the condition that they be expended in a particular manner or used over a particular year, and those conditions were undischarged as at the reporting date, the nature of any amounts pertaining to those undischarged conditions are disclosed in Note 3(e). That note also discloses the amount of contributions recognised as revenues in previous financial years, which were expended in respect of Melbourne City Council's operations during the current financial year.
Tax equivalents and dividends from subsidiaries are recognised as income when received or amounts have been declared at the respective subsidiary companies' board meetings.
Revenue arising from service contracts is recognised by reference to the stage of completion of the contract, unless the outcome of the contract cannot be reliably estimated. The stage of completion is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the contract. Administrative overheads are not included in the costs of the contract for this purpose. Where the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.
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| e) Intangibles |
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Goodwill
Where an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. Fair value is defined in note 1(k)(iii). The excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired is brought to account as goodwill. Goodwill is not amortised, but tested for impairment annually.
(ii) Licences
Licences are recorded at cost and amortised on a straight line basis over a 20 month period.
(iii) Software
Software, that is not an integral part of the related hardware, is classified as intangibles, recorded at cost and amortised on a straight line basis over a 5 year period.
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Goodwill |
Licences |
Software |
| Useful lives |
Indefinite |
Finite |
Finite |
| Method used |
Not depreciated or revalued |
20 months - straight line |
5 Years - straight line |
| Internally generated/ acquired |
Acquired |
Acquired |
Acquired |
| Impairment test/ recoverable amount test |
Reviewed annually for indication of impairment |
Amortised method reviewed at each financial year-end. |
Amortised method reviewed at each financial year-end;
Reviewed annually for indication of impairment |
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