2007-08 Report

APPENDIXES

QUEENSLAND ART GALLERY ANNUAL REPORT 2007–08 85

(i) Acquisition of Assets

Actual cost is used for the initial recording of all non-current physical and

intangible asset acquisitions. Cost is determined as the value given as

consideration plus costs incidental to the acquisition, including all other

costs incurred in getting the assets ready for use.

The Queensland Art Gallery Foundation purchases Art works and then

donates them to the Gallery. These particular Art works are included in the

total value of the Art works in the Gallery's Balance Sheet and in the Income

Statement as revenue. The balance disclosed in the financial statements

reflects the fair market value of the donated assets.

Assets acquired at no cost or for nominal consideration are recognised at

their fair value at date of acquisition in accordance with AASB 116

Property,

Plant and Equipment

(j) Property, Plant and Equipment

The Gallery's Collection (Art Works), the Gallery Library's Heritage Collection

and all items of plant and equipment with a value equal to or in excess of

$5,000 are recognised for financial reporting purposes.

Items of plant and equipment with a lesser value are expensed in the year

of acquisition.

An amount of $12.975M of furniture, fitting and equipment (FFE) was

capitalized by Arts Queensland in 2006–07 in order to commission the

Millennium Arts Project, being the Millennium Library and the Gallery of

Modern Art. In 2007–08 a review of FFE was undertaken for Arts

Queensland by consultants, in order to transfer this FFE to the statutory

agencies tenanting the buildings (Queensland Art Gallery and State Library

of Queensland).

After discussions with Queensland Treasury, the policy determined was for

the transfer to occur in 2006–07, with some of the previously capitalized

expenditure to be expensed by the tenants. The total transfer amount for

the Queensland Art Gallery was $7.85M.

The Gallery expensed $4.651M of the transferred FFE, and capitalized

$3.198M. Depreciation of $0.185M was posted for 2006–07, for the FFE

recognised as non-current assets. The revised opening balances as at

2006–07 then flowed to 1 July 2007.

(k) Revaluation of Non-Current Physical Assets

The Gallery's Art Works and the Gallery Library's Heritage Collection are

considered to be heritage and cultural assets and measured at fair value in

accordance with AASB 116

Property, Plant and Equipment

and Queensland

Treasury's

Non-Current Asset Accounting Policies for the Queensland Public

Sector

The Gallery's Art Works, including gifts, are revalued on an annual basis for

insurance purposes by the Gallery's experienced specialist curatorial staff

who are considered experts in their field. The basis of valuation for Art

Works is current market values.

Art Works that have had a material movement in valuation are revalued

during the year using recent auction results. On this basis, the Art Works

are comprehensively revalued each year.

The Gallery Library's Heritage Collection is revalued at the end of the year

using current prices listed on AbeBooks.com, an international portal for

registered booksellers, new and second hand, to list their available stock.

Plant and equipment are measured at cost. The carrying amounts for plant

and equipment at cost should not materially differ from their fair value.

Any revaluation increment arising on the revaluation of an asset is credited

to the asset revaluation reserve of the appropriate class, except to the

extent it reverses a revaluation decrement for the class previously recog-

nised as an expense. A decrease in the carrying amount on revaluation is

charged as an expense, to the extent it exceeds the balance, if any, in the

revaluation reserve relating to that asset class.

Separately identified components of assets are measured on the same

basis as the assets to which they relate.

(l) Depreciation of Property, Plant and Equipment

Plant and equipment is depreciated on a straight-line basis so as to allocate

the net cost or revalued amount of each asset, less its estimated residual

value, progressively over its estimated useful life to the Gallery.

The Gallery's Art Works and the Gallery Library's Heritage Collection are not

depreciated due to the heritage and cultural nature of the assets.

Where assets have separately identifiable components that are subject to

regular replacement, these components are assigned useful lives distinct

from the asset to which they relate and are depreciated accordingly.

Any expenditure that increases the originally assessed capacity or service

potential of an asset is capitalised and the new depreciable amount is

depreciated over the remaining useful life of the asset to the Gallery.

For each class of depreciable asset the following depreciation rates were used:

Class

Rate %

Plant and Equipment

Computers

Motor vehicles

Printers

Other

(m)Impairment of Non-Current Assets

The Gallery is not primarily dependent on its assets' ability to generate net

cash flows and therefore, if deprived of the asset, the Gallery would replace

the asset's remaining future economic benefits. The value in use is the

depreciated replacement cost of the asset.

All non-current physical assets are assessed for indicators of impairment

on an annual basis. If an indicator of possible impairment exists, the

Gallery determines the asset's recoverable amount. Any amount by which

the asset's carrying amount exceeds the recoverable amount is recorded as

an impairment loss.

The asset's recoverable amount is determined as the higher of the asset's

fair value less costs to sell and depreciated replacement cost.

An impairment loss is recognised immediately in the Income Statement,

unless the asset is carried at a revalued amount. When an asset is

measured at a revalued amount, the impairment loss is offset against the

asset revaluation reserve of the relevant class to the extent available.

Where an impairment loss subsequently reverses, the carrying amount of

the asset is increased to the revised estimate of its recoverable amount,

but so that the increased carrying amount does not exceed the carrying

amount that would have been determined had no impairment loss been

recognised for the asset in prior years. A reversal of an impairment loss is

recognised as income, unless the asset is carried at a revalued amount, in

which case the reversal of the impairment loss is treated as a revaluation

increase (Note 1(k)).

(n) Leases

Operating lease payments are representative of the patterns of benefits

derived from the leased assets and are expensed in the periods in which

they are incurred.

The

Arts Legislation Amendment Act 1997

transferred the assets and

liabilities of the Queensland Cultural Centre Trust (QCCT) that was

abolished in December 1997 to the State of Queensland and the Corporate

Administration Agency (CAA) became the manager of the Cultural Centre

precinct.

The Art Gallery Board of Trustees has a signed lease agreement with the

former QCCT for the main Art Gallery building located within the Cultural

Centre precinct for which no rent is charged.

The lease has been assumed by the State of Queensland (Section 85 (2) of

the Act).