RAND WATER ANNUAL REPORT 2023

Consolidated Annual Financial Statements for the year ended 30 June 2023

Summary of Principal Accounting Policies and Significant Judgements 3.2 Property, plant and equipment (Continued)

a. the right to obtain substantially all of the economic benefits from use of the identified asset; and

b. the right to direct the use of the identified asset.

Only when the Group is assessed to have the right to direct how and for what purpose the asset is used throughout the period of use within the scope of the right as defined in the contract. The Group has the ability to make relevant decisions about how and for what purpose the asset is used. Subsequent expenditure Subsequent expenditure on property, plant and equipment is capitalised only when the expenditure enhances the value or output of the asset beyond original expectations and it can be measured reliably. Costs incurred on repairing and maintaining assets are recognised in the statement of financial performance in the period in which they are incurred. Depreciation Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives, using the straight‑line method. Depreciation commences when the asset is available for its intended use by management.

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Land and assets under construction are not depreciated. All other property, plant and equipment, including capitalised leased assets, are depreciated on a straight‑line basis over their estimated useful lives or the term of the lease, whichever is shorter to their estimated residual value. Major repairs are depreciated over the remaining useful life of the related asset or to the date of the next major repair, whichever is shorter. The estimated useful lives are as follows:

Asset Category

Estimated useful life (years)

Land

Indefinite

Buildings •

Building structures Building components

50‑80 10‑20

•

Plant and Machinery • Plant structures

80

• • •

Plant components

3‑30

Reservoirs

80

Dams

40 ‑100

Pipelines •

Pipeline structures Pipeline components

25‑75 15‑50

•

Furniture and fixtures

3‑10 6‑15 3‑10

Motor vehicles Office equipment

Information technology equipment (IT equipment)

3‑8

Assets under construction Right of use tangible asset

No depreciation

2‑3

201