Financial instruments Property, plant and equipment Financial assets and financial liabilities are initially measured at fair value plus transaction costs unless they are carried at fair value through surplus and deficit in which case the transaction costs are recognised in the surplus or deficit in the statement of comprehensive income. Property, plant and equipment consists of motor vehicles, equipment, furniture and fittings, leasehold improvements, and library books. Cash and cash equivalents Additions Cash and cash equivalents include cash on hand and funds on deposit at banks with an original maturity of three months or less. Short-term deposits Short-term deposits include funds on deposit at banks with an original maturity of more than three months but not more than twelve months and are initially measured at fair value plus transaction costs. Debtors and other receivables Debtors and other receivables are recorded at their face value, less any provision for impairment. Impairment of a receivable is established when there is objective evidence that the Commission will not be able to collect amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, receivership or liquidation, and default in payments are considered indicators that the debtor is impaired. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the surplus or deficit in the statement of comprehensive income. When the receivable is uncollectible, it is written off against the allowance account for receivables. Overdue receivables that are renegotiated are reclassified as current (that is, not past due). 78 72 Property, plant and equipment is measured at cost less any accumulated depreciation and impairment losses. The cost of an item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits or service potential associated with the item will flow to the Commission and the cost of the item can be measured reliably. Work in progress is measured at cost less impairment and is not depreciated. In most instances, an item of property, plant and equipment is initially recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition. Disposals Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the surplus or deficit in the statement of comprehensive income. Subsequent costs Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to the Commission and the cost of the item can be measured reliably. The costs of day-to-day servicing of property, plant and equipment are recognised in the surplus or deficit in the statement of comprehensive income as they are incurred. Depreciation Depreciation is provided on a straight-line basis on all property, plant and equipment, at rates that will write off the cost of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of property, plant and equipment have been estimated as follows: Human Rights Commission