Council goes into accounting detail over Wulanda financial future

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Council goes into accounting detail over Wulanda financial future

The depreciation approach and schedule of Wulanda Recreation and Convention Centre was explained at a recent City Council meeting.

The matter was raised by Councillor Paul Jenner in questions with notice at Council’s October monthly meeting.

Cr Jenner sought detail around the centre’s depreation and future valuations.

“Can council please be advised of the depreciation approach and schedule and how a future valuation may impact depreciation?” Cr Jenner asked.

“What happens if the new valued price is hugely higher than the build price with regards to forward budgeting?”

In response, council’s Financial Services manager Julie Scoggins said the initial valuation will be as discussed at the Audit and Risk Committee and agreed with external auditors.

“This could be complicated to answer, so I will try to keep this simple,” Ms Scoggins said.

“We will value and depreciate the Wulanda facility based on the actual expenditure in the first instance.

“Depreciation approach, based on the asset information that will be provided to us, we will break the facility down into its component parts.

“For example the building, fixtures and fittings, plant such as pool pumps, and IT equipment.

“How the depreciation is scheduled will depend upon the estimated useful lives for that category of asset.

“Which will be based on the information provided to us and aligned with the asset accounting policy and the financial statements as presented.

“We have buildings with estimated useful lives of 15 to 100 years and other plant and equipment with estimated useful lives of four to 20 years.

“Any increase in valuation will be depreciated over the useful life of the asset.

“For example, a building that cost $100,000 with an estimated useful life of 100 years the annual depreciation will be $1000 p.a.

“Building is revalued at $110,000 with an estimated useful life of 100 years will be $1100 p.a.

“For a building that cost $100,000 with an estimated useful life of 50 years the annual depreciation will be $2000 p.a.

“Building is revalued at $110,000 with an estimated useful life of 50 years will be $2200 p.a.”

Meanwhile, Ms Scoggins said any valuation change would mean that budgeted depreciation would change in future.

“However, the impact on annual depreciation would depend upon the useful life of the individual asset that had been revalued,” she said.

“A revaluation of the building would be ‘spread’ over the estimated useful life of the asset which has a relatively long useful life.

“We do not revalue items such as pool pumps.

“These would remain at cost and have a shorter useful life and as such would not be impacted by any valuation change.”

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