Property, plant, and equipment Depreciation Property, plant, and equipment consists of equipment, furniture and fittings, leasehold improvements, library books and motor vehicles. Property, plant, and equipment are measured at cost less any accumulated depreciation and impairment losses. 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: Additions Equipment 2.5–10 years 10–40% Furniture and fittings 5–10 years 10–20% Leasehold improvements 5–9 years 11–20% Library books 5 years 20% Motor vehicles 5 years 20% 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 through a non-exchange transaction, it is recognised at its fair value 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 reported as a net amount in the surplus or deficit in the statement of comprehensive revenue and expense. 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 as they are incurred. Annual Report 2015 Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvement, whichever is the shorter. The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year-end. Intangible assets Software acquisition Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Costs associated with maintaining computer software, the development and maintenance of the Commission’s website, and staff training costs are recognised as an expense when incurred. Trademarks Trademarks are capitalised on the basis of the costs incurred to register the trademark with the Intellectual Property Office of New Zealand. 45