7 Explanation of Transition to NZ IFRS
The Crown's financial statements for the year ended 30 June 2008 are the first financial statements that comply with NZ IFRS. LINZ has applied NZ IFRS 1 First-time Adoption of NZ IFRS (NZ IFRS 1) in preparing these financial statements.
The Crown's NZ IFRS adoption date is 1 July 2007.
The accounting policies set out in the Notes to the Financial Statements have been applied in preparing financial statements for the year ended 30 June 2008, the comparative information presented for the year ended 30 June 2007.
In preparing its opening NZ IFRS Balance Sheet and restating the 2007 financial statements, the Crown has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (previous GAAP). An explanation of how the transition from previous GAAP to NZ IFRS has affected the Department's financial position, financial performance and cash flows are set out in the following tables and the notes that accompany the tables.
Reconciliation of equity
The following table shows the changes in equity, resulting from the transition from previous NZ GAAP to NZ IFRS as at 30 June 2007.
| Transition balance sheet 30/6/06 |
Comparative balance sheet 30/6/07 |
|||||
|---|---|---|---|---|---|---|
| Previous GAAP $000 |
Effect of transition to NZ IFRS $000 |
NZ IFRS $000 |
Previous GAAP $000 |
Effect of transition to NZ IFRS $000 |
NZ IFRS $000 |
|
| Assets | ||||||
| Inventories | 749 | 749 | 690 | 690 | ||
| Trade and other receivables | 8,060 | (2,254) | 5,806 | 4,485 | (2,263) | 2,222 |
| Accounts Receivables - State-owned enterprises |
16 | – | 16 | – | – | – |
| Accounts Receivables - Crown entities |
430 | – | 430 | 2,056 | – | 2,056 |
| Cash and cash equivalents | 4,414 | 2,254 | 6,668 | 3,941 | 2,263 | 6,204 |
| Total current assets | 13,669 | 0 | 13,669 | 11,172 | 0 | 11,172 |
| Physical Assets | – | 315,627 | 315,627 | – | 703,859 | 703,859 |
| Properties Held for Sale - Term | 399,502 | 15,056 | 414,558 | 397,457 | (389,889) | 7,568 |
| Forests | – | 763 | 763 | – | 763 | 763 |
| Debtors and other receivables | 7 | – | 7 | 7 | – | 7 |
| Total non-current assets | 399,509 | 331,446 | 730,955 | 397,464 | 314,733 | 712,197 |
| Total assets | 413,178 | 331,446 | 744,624 | 406,636 | 314,733 | 723,369 |
| Liabilities | ||||||
| Trade and other payables | (12,129) | – | (12,129) | (6,118) | – | (6,118) |
| Provisions | (14,119) | – | (14,119) | (11,926) | – | (11,926) |
| Total current liabilities | (26,248) | 0 | (26,248) | (18,044) | 0 | (18,044) |
| Deferred income | – | (9,777) | (9,777) | – | (9,590) | (9,590) |
| Trade and other payables | (9,777) | 9,777 | – | (9,602) | 9,590 | (12) |
| Provisions | (12,991) | – | (12,991) | (14,121) | – | (14,121) |
| Total non-current liabilities | (22,768) | 0 | (22,768) | (23,723) | 0 | (23,723) |
| Total liabilities | (49,016) | 0 | (49,016) | (41,767) | 0 | (41,767) |
| Equity | ||||||
| Tax payer funds | (364,162) | (763) | (364,925) | (366,869) | (763) | (367,632) |
| Revaluation Reserve | – | (330,683) | (330,683) | (366,869) | (313,970) | (313,970) |
| Total funds employed | (364,162) | (331,446) | (695,608) | (368,749) | (314,733) | (681,602) |
| Total equity and liabilities | (413,178) | (331,446) | (744,624) | (408,636) | (314,733) | (723,369) |
Reconciliation of the profit
For the year ended 30 June 2007
| Previous GAAP | Effect of transition to NZ IFRS |
NZ IFRS | |
|---|---|---|---|
| Revenue | |||
| Sale of goods and services | 20,493 | – | 20,493 |
| Other operational revenue | 498 | – | 498 |
| Total income | 20,991 | 0 | 20,991 |
| Operating expenses | |||
| Non-departmental output classes | (260) | – | (260) |
| Depreciation and amortisation expense | (163) | – | (163) |
| Rental and leases costs | (51) | – | (51) |
| Provision for doubtful debts | – | – | – |
| Debts write-off/(recovered) | (4) | – | (4) |
| Write-down/(up) of assets | (1,807) | – | (1,807) |
| Loss/(gain) on sale of properties | 6,048 | – | 6,048 |
| Property disposals costs provisions | – | – | – |
| Other operating expenses | (19,853) | – | (19,853) |
| Total expenditure | (16,090) | 0 | (16,090) |
| Net surplus/(deficit) for the period | (4,901) | 0 | (4,901) |
Notes to the reconciliation of previous GAAP
- LINZ has had to reclassify part of the fixed assets from held for sale to physical assets due to the held for sale recognition criteria not being met under NZ IFRS.
- The Crown received rent in advance for premises rented up to year end 2059. This is deferred income and has to be released to rental and interest income.
- The forestry assets are required to be stated at fair value and separated from other assets. LINZ uses insurance company valuation as the fair value of these assets.
- The Crown discloses the deposits held in trusts within the debtors section under NZ GAAP. This has now been disclosed within the cash section in accordance with NZ IAS 39.
