i) Prepaid lease revenue

The sale of the Westrail Freight Business on 17 December 2000 included an operating lease of the freight network infrastructure for 49 years between The Western Australian Government Railways Commission (WAGR) – now Public Transport Authority (PTA) and Westnet Rail Pty Ltd.The lease rentals were fully prepaid on 17 December 2000, and credited to deferred operating lease revenue. The annual rental from this lease is recognised as revenue, together with an associated interest expense, in accordance with net present value principles.

j) Cash

For the purpose of the Statement of Cash Flows, cash includes cash assets and restricted cash assets net of outstanding bank overdrafts.

k) Inventories

Inventories are valued at the lower of cost and net realisable value. Costs are assigned by the method most appropriate to each particular class of inventory, with the majority being valued on a weighted average cost basis.

l) Receivables

Receivables are recognised at the amounts receivable as they are due for settlement generally no more than 30 days from the date of recognition. Collectability of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is raised where some doubts as to collection exists.

m) Interest revenue

Interest revenues are recognised as they are accrued.

n) Intangible assets and expenditure carried forward

o) Payables

Payables, including accruals not yet billed, are recognised when PTA becomes obliged to make future payments as a result of a purchase of assets or services. Payables are generally settled within 30 days.

p) Interest bearing liabilities

Loans are recorded at an amount equal to the net proceeds received. Borrowing costs are recognised as expenses in the period in which they are incurred, except where they are material and apply to qualifying assets. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use. A substantial period of time is longer than twelve months. No borrowing costs have been capitalised during the period.

q) Employee benefits

Annual leave This benefit is recognised at the reporting date in respect to employees’ services up to that date and is measured at the nominal amounts expected to be paid when the liabilities are settled.

Long service leave

The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provisions for employee benefits, and is measured at the nominal amounts expected to be paid when the liability is settled.The liability for long service leave expected to be settled more than 12 months from the reporting date is recognised in the provisions for employee benefits and is measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.

Consideration is given, when assessing expected future payments, to expected future wage and salary levels including relevant on-costs, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.