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  • Fair Value Measurement

    Accounting Policy

    The ATO engaged the services of Jones Lang Lasalle (JLL) to conduct an independent materiality review of carrying amounts for all non-financial assets as at 30 June 2018. An annual assessment is undertaken to determine whether the carrying amount of the assets is materially different from the fair value. Comprehensive valuations are carried out every three years with the previous valuation conducted as at 31 March 2016. JLL has provided written assurance to the ATO that the models developed are in compliance with AASB 13.

    The methods utilised to determine and substantiate the unobservable inputs are derived and evaluated as follows:

    Physical Depreciation and Obsolescence - Assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured utilising the Depreciated Replacement Cost approach. Under the Depreciated Replacement Cost approach, the estimated cost to replace the asset is calculated and then adjusted for physical depreciation and obsolescence. Physical depreciation and obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration. For all Leasehold Improvement assets, the consumed economic benefit / asset obsolescence deduction is determined based on the term of the associated lease.

    The ATO's policy is to recognise transfers between fair value hierarchy levels at the end of the reporting period.

    Note 5A: Fair Value Measurements at the end of the reporting period
      2018$'000 2017$'000
    Non-financial assets1,2  
    Plant and Equipment3 62,647   65,024
    Leasehold Improvements3 195,175   211,310
    Total non-financial assets  257,822   276,334
    Notes:
    1 No non-financial assets were measured at fair value on a non-recurring basis as at 30 June 2018 (2017: Nil).
    2 The ATO's assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all non-financial assets is considered their highest and best use.
    3 The ATO has a total of $3.4million (2017: $6.9 million) Assets Under Construction (AUC) relating to Leasehold Improvement (LHI) assets of $1.3 million (2017: $5.0 million) and Plant and Equipment assets of $2.1 million (2017: $1.9 million). The AUCs are carried at historical cost and are materially at fair value.
      Last modified: 26 Oct 2018QC 57162