Section D: Racecourse Facilities D1: Asset Registry Issued: July 1, 2004 Greyhound Racing NSW Quad 2, Level 2, 8 Parkview Drive Homebush Bay NSW 2127 Correspondence Locked Bag 170 Concord West NSW 2138 Phone 02 9764 6255 Fax 02 9764 6244 www.grnsw.com.au admin@grnsw.com.au Copyright GRNSW, 2004. All rights reserved.
Operating Standard to be Met Operating Standard Standard 18 Asset Registry All Clubs shall maintain an Asset Registry that details all physical non-current assets owned and controlled by the club classified by location and category. The Registry should include the original purchase price date and cost of each asset and its fair value. Guidance for Meeting the Standard This chapter explains the purpose of maintaining an Asset Registry and provides guidance for the preparation and maintenance such as Registry. Guidance is also provided on how a Club should value their assets. GRNSW Assistance GRNSW will assist clubs by providing advice, training and assistance as required. Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 2
Designing and Maintaining an Asset Registry An Asset Registry is simply an inventory of all the physical non-current assets owned and controlled by a registered greyhound-racing club classified by location (e.g. kennel block) and category (e.g. air-conditioners). It should also show the original purchase date and cost of each asset (or if this is not known, its approximate age and estimated original purchase cost) and its fair value (see below) together with some other useful information (e.g. the depreciation rates for each asset class). Purpose of Asset Registry There are three objectives for an asset register. 1. The Asset Registry records details of the existence and location for all club assets for fiduciary and security purposes. To avoid excessively large records, only assets with some minimum value are recorded. Often this value is $300, which is a value set by the Australian Taxation Office. For tax purposes plant assets with an initial cost of less than $300 may be immediately expensed in the P&L in the period in which they were purchased. There are other tax depreciation regimes, where assets may be expensed even when their initial cost is up to $1,000. Offsetting this convenience of limiting the entries in the Asset Register is the observation that some low cost assets exhibit a high attraction to theft (such as electronics). Clubs may decide to retain these high risk items (sometimes referred to as desirable items) in their Asset Register, even if they have been expensed and have nil value, because it allows the club to monitor the existence of the asset. 2. For those clubs which may be subject to income tax, the Asset Register is used to calculate the tax deduction for depreciation of assets. The calculation of a tax deduction for depreciation requires the amortisation of the asset s initial cost over the determined life of the asset. Usually the life of an asset is the life selected by the Australian Taxation Office. These asset lives can vary, depending upon when the asset was purchased and also to some extent, the class of taxpayer. Clubs considering claiming a tax deduction for depreciation are encouraged to obtain professional tax advice 3. The third purpose of the Asset Register is to maintain an asset listing to assist in the cyclical maintenance of assets and their future planned replacement. Valuing the Assets For tax purposes, where clubs are entitled to a tax deduction for the depreciation of the club s assets, the initial cost of the asset is the original cost (historic cost). Depreciation is calculated by amortising the asset s historical cost over the likely life of the asset. The Australian Taxation Office (ATO) provides a list of likely asset lives for the assistance of taxpayers (see Guide to Depreciating Assets on www.ato.gov.au). Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 3
Annual depreciation expenses that are claimed as tax deductions should be based on the depreciation rates derived from Australian Tax Office tax rulings on the effective lives of assets. However clubs may elect to vary these ATO asset lives if the club has a substantial reason; this reason should be capable of being proved to the ATO if depreciation expense was ever challenged by the ATO. As a result, for taxation purposes, all physical non-current assets are valued at written down historical cost (i.e. original purchase price adjusted for the accumulated annual depreciation). For budgeting and accounting statements, physical non-current assets are to be valued at fair value in accordance with the Australian Accounting Standard AASB1041 Revaluation of Non-Current Assets. Fair value is defined paragraph 9.1 of the standard as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm s length transaction. Fair value estimates should be done at least once every five years. Valuations should be conducted internally or by external valuers depending on whether the club s own staff have the technical expertise required to value assets, would be sufficiently objective to undertake the job and could be freed up for this purpose. GRNSW will be available to assist Clubs to value their assets. The principles to be followed in valuing non-current assets for an asset registry are explained in the NSW Treasury (Office of Financial Management) Policy and Guidelines Paper TPP 03-02 Accounting Policy Valuation of Physical Non-Current Assets at Fair Value, May 2003, which is available under Publications on the NSW Treasury website www.treasury.nsw.gov.au. In most cases the revaluation of an asset will result in an increase in the value of that asset. In these circumstances, the increase in value (called a revaluation increment) is to be credited to a revaluation reserve account. In those circumstances where the revaluation results in a decrement in value, then the decrement is to be offset against any previous revaluation reserve and if that revaluation reserve is insufficient, then the balance is to written off against the P&L for that year. For simplicity some clubs may chose to use the ATO depreciation rates to depreciate the fair value of the asset in their accounts in order to match revenue with the decreasing service potential of the asset. In these cases the depreciation is often referred to as accounting depreciation. Note however that any deduction for taxation should still be calculated on the original historic cost and not the re-valued fair value. Clubs considering adopting this approach or where assets have been purchased second hand are advised to obtain professional taxation advice. In most cases these principles will result in the following valuation rules being applied to greyhound racing club assets. Where a club does not own the land on which assets are situated (or have a secure long term lease of the land) only the improvements to the land funded by the club or GRNSW (e.g. site preparations, buildings, infrastructure, fixtures and fittings) should be valued for inclusion in the asset registry. Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 4
Trading activity an independent group of assets that is primarily dependent on generating a positive net cash flow (e.g. kiosk, restaurant, poker-machine club, etc) Fair value equals the current market selling prices or recent transaction prices available for assets that are similar in use, type and condition. If such comparable assets do not exist, fair value equals the lower of the: Sum of the current market buying prices of the individual assets that comprise the trading activity with an allowance for any degradation of their assets; or Present value of the expected future net cash inflows of the trading activity put to its highest and best use. Non-trading activity all other assets that are in continued use, but are not deemed to belong to discrete trading activities (e.g. racetrack, grandstand, lure, etc) Fair value equals the asset s buying price, the best indicator of which is the minimum replacement cost of a technologically modern equivalent asset, allowing for: Any differences in service potential and operating costs between the actual asset and its hypothetical substitute; and Any degradation that should be applied as a result of the actual asset having a shorter working life than a newly acquired substitute. Surplus asset all trading or non-trading activity assets for which the club no longer has any relevant use. Fair value equals the: Current market selling prices or recent transaction prices available for assets that are similar in use, type and condition; or Highest and best value to which the asset could be put if it was legally possible to use it for an alternative purpose. Note that where a surplus asset (e.g. old grandstand adjoining a new one) needs to be demolished it may be assigned a negative value (the likely cost of its demolition and removal) in the asset registry. When valuing a saleable item, use listed retail prices or auction information (e.g. advertised prices or The Trading Post newspaper for moveable items or nearby real estate prices for similarly zoned land). Preparing the Registry Each club should use the following table to itemise each of its known assets under each of the categories shown. If additional asset categories are needed these should be inserted in alphabetical order. For simplicity it is proposed that Clubs use the depreciation rates based on Tax Rulings on the effective lives of assets not only for taxation purposes, but also for accounting purposes. Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 5
Relationship of Asset Register to accounting records Assets in the Asset Register are termed capitalised; that is the value of the asset is recorded in the balance sheet as well as the Asset Register. If an asset is re-valued to fair value, then the new value is the same in both the Asset Register and the balance sheet. The sum of the value of all assets recorded in the balance sheet should equal the sum of the value in the asset register. It is not possible for assets to be in only one of the two reports (the balance sheet or the asset register) or at different values and any discrepancy should be reconciled. Maintaining the Registry Each time a new asset is acquired or an existing asset is rehabilitated, replaced or expanded, the registry should be updated. The registry should be redone (with new valuations) at least once every five years. Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 6
Asset Registry (Date prepared: ) Assets by Category Asset Location Purchase Date if known, otherwise Asset Age (<5years, 5-10yrs, or >10 yrs) Historical Cost (i.e. Original Purchase Price) if known ($) 1. Tax Deprecia tion Rate % 2. Opening Depreci ate-ion ($) 3. This years deprecia tion expense ($) =1*2 4. Closing Depreciat e-ion ($) =3+4 5. For tax: Written Down Value ($) =1-5 6. Estimated Fair Value ($) Date sold Sale Value ($) Air-conditioning Ducted Room units Amusement machines & equipment Awnings Beverage dispensing units Bookshelves Buildings (excluding land) Bar facilities Betting facilities Club facilities Function halls Grandstands Judges tower Kennels Kiosks Kitchens Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 7
Meeting rooms Offices Restaurants Sheds Stewards room Strongrooms Toilets Viewing facilities Miscellaneous Bulldozers Burglar alarm system Cables & wires Overhead Underground Inbuilt Calculators Caravans Carpets Car parking Cash registers Casks Catching pen CD s, CVD s, etc Chairs Coffee & tea makers Compressors Computers Computer software Curtains, drapes & blinds Cutlery Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 8
Desks Dishwashers Displays (e.g. pictures, paintings, etc) Earth moving plant & heavy equipment Emergency exit lights Fans - electric Fencing - perimeter Filing cabinets Fire Alarms Hoses & nozzles Extinguishers Automatic sprinkler systems Floor coverings linoleum & vinyl Furniture & fittings - other Garbage bins & units Gardens Gas cylinders (LPG) Generators (motor) Hot water service Heating units Incinerators Instruments Juke boxes Kennels Kitchen appliances - Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 9
other Kitchen cupboards Kitchen utensils Lamps Land (where owned by club) Used land Surplus land Lawn mowers Letter boxes Lifts & elevators Light fittings Lighting system Public areas Tracks Linoleum & similar Lure including cable & tower mechanics Meters Mobile phones Motor vehicles Buses, lorries & trucks Cars Fork lifts, front end loaders, etc Motor cycles & scooters Office equipment other Open spaces (unused land) Paths Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 10
Public address systems Pumps Photo-finish and timing mechanisms Photocopiers Plant & equipment - other Playgrounds Poker machines Printers Public areas (other than buildings) Pumps Radios Rail - running Refrigerators Roads Saw benches Security Cameras Semaphore boards Septic tanks Signs Neon Painted Sofas & arm chairs Starting boxes & pads Steam cleaners Storage systems Stoves & ovens Switchboards Tables Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 11
Telephone installations Television receivers Tools & loose plant Electric Manual Totalisator Computer equipment Ancillary equipment (e.g. ticket issuing machines) Track - racing Tractors Trailers Transformers Turnstiles Vacuum cleaners Video equipment Washing machines Waste storage Watering systems Water tanks Weighing machines Welding plant Wells Wheelbarrows Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 12
Copyright Greyhound Racing NSW, 2004 Operating Standards for NSW Greyhound Racing Clubs 13