28 Annual Report
Estimates and assumptions are continually evaluated and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below:
Property, plant and equipment useful lives and residual value
At each balance date the Law Commission reviews the useful lives and
residual values of its property, plant and equipment. Assessing the
appropriateness of useful life and residual value estimates of property,
plant and equipment requires the Law Commission to consider a number
of factors such as the physical condition of the asset, expected period of
use of the asset by the Law Commission, and expected disposal proceeds
from the future sale of the asset.
The Law Commission has not made significant changes to past
assumptions concerning useful lives and residual values. The carrying
amounts of property, plant and equipment are disclosed in note
Critical judgements in applying the Law Commissionfs accounting
Management has exercised the following critical judgement in
applying the Law Commissionfs accounting policies for the period ended
30 June 2009:
Lease classification
Determining whether a lease agreement is finance or an operating lease
requires judgement as to whether the agreement transfers substantially
all the risks and rewards of ownership to the Law Commission.
Judgement is required on various aspects that include, but are not
limited to, the fair value of the leased asset, the economic life of the
leased asset, whether or not to include renewal options in the lease term
and determining an appropriate discount rate to calculate the present
value of the minimum lease payments, property, plant and equipment,
whereas for an operating lease no such asset is recognised.
2 Revenue from Crown
The Law Commission has been provided with funding from the Crown
for the specific purposes of the Law Commission as set out in its founding
legislation and the scope of the relevant government appropriations.
Apart from these general restrictions, there are no unfulfilled conditions
or contingencies attached to government funding (2008 nil).
