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## 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 

## (i) Property, plant and equipment 

## (i) Recognition and measurement 

Following initial recognition at cost, land and buildings are carried at a revalued amount, which is the fair value at the date of the revaluation less any subsequent accumulated depreciation on buildings and accumulated impairment losses� 

Fair value is determined by reference to market-based evidence, which is the amount for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date� 

Any revaluation increment is credited to the asset revaluation reserve included in the equity section of the statement of financial position, unless it reverses a revaluation decrement of the same asset previously recognised in the statement of comprehensive income� Any revaluation decrement is recognised in the income statement unless it directly offsets a previous increment of the same asset in the asset revaluation reserve� In addition, any accumulated depreciation as at revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset� Upon disposal of land and buildings, any revaluation reserve relating to the particular asset being sold is transferred to the capital profits reserve� 

For the 31 December 2011 and prior financial years, land and buildings were valued by external independent valuers on a rotational, but at least triennial basis, to ensure that the carrying amount did not differ materially from the respective asset’s fair value at each reporting date� Commencing with the 31 December 2012 financial year, the Directors decided that all land and buildings will be valued on an annual basis by independent valuers� 

All initial lump sum payments in respect of pastoral and perpetual property leases have been classified as land� The remaining lease payments are nominal and are therefore expensed to the income statement as incurred� 

Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses� Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred� Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation� Directly attributable costs for the acquisition and construction of an asset are capitalised if the relevant recognition criteria are met� All other repairs and maintenance are recognised in the income statement as incurred� 

We review and adjust, if appropriate, the residual values, useful lives and amortisation methods of all property, plant and equipment at the end of each financial year� 

## (ii) Depreciation 

Depreciation is calculated on a straight line basis over the estimated useful life of the asset as follows: 

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## (iii) Impairment 

We review the carrying values of plant and equipment for impairment when events or changes in circumstances indicate the carrying value may not be recoverable� 

For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs� If any indication of impairment exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount� 

The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use� In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit� 

