## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONT 

For the three months ended 31 March 2013 

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

## (i) Property, plant and equipment (continued) 

## (iv) Derecognition 

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal� Any gain or loss arising on derecognition of the asset, calculated as the difference between the net disposal proceeds and the carrying amount of the item, is included in the income statement in the period the item is derecognised� 

## (j) Leases & Agistment 

## AACo as a lessee 

We determine whether an arrangement is or contains a lease based on the substance of the arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement� 

## (i) Pastoral and perpetual property leases 

Pastoral and perpetual property leases have been included in Property, Plant and Equipment (Refer note 16)� 

## (ii) Agistment agreements 

Agistment agreements give us the right to use land under a licence agreement to feed and pasture livestock for a fee� Agistment agreements are usually up to 12 months duration that may be renewed for further periods� Agistment rights are not capitalised by us and the costs are expensed as incurred� 

## (iii) Other leases 

Finance leases, which transfer to us substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments� Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability� Finance charges are recognised in finance costs in the income statement� 

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that we will obtain ownership by the end of the lease term� 

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term� Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability� 

## (k) Impairment 

## (i) Non-financial assets 

Our tangible and intangible assets (excluding inventories, biological assets, current and deferred tax assets, and financial assets) are measured using the cost basis and are written down to their recoverable amount where their carrying value exceeds recoverable amount� 

Assets with an indefinite useful life are not subject to amortisation and are tested on an annual basis for impairment, or earlier where an indication of impairment exists� Assets that are subject to amortisation are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable� 

At each reporting date, we assess whether there is any indication that an asset may be impaired� External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for indicators of impairment� If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated� 

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount� Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use� For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units)� Non-financial assets other than goodwill that suffered impairment are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed� 

