Notes to the Financial Statements for the year ended 30 June 2016
Note 1 . Significant Accounting Policies ( continued )
current liability . Otherwise the liability is treated as non-current .
Salaries and wages
A liability for salaries and wages is recognised and measured as the amount unpaid at the reporting date at current pay rates in respect of employees ' services up to that date . This liability represents an accrued expense and is included in note 15 as a payable .
Annual leave
A liability for annual leave is recognised . Amounts expected to be settled within 12 months are calculated on current wage and salary levels and includes related employee on-costs . Amounts not expected to be settled within 12 months are calculated on projected future wage and salary levels and related employee on-costs , and are discounted to present values .
This liability represents an accrued expense and is reported in Note 15 as a payable .
As Council does not have an unconditional right to defer this liability beyond twelve months annual leave is classified as a current liability .
Long service leave
A liability for long service leave is measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date . The value of the liability is calculated using current pay rates and projected future increases in those rates and includes related employee on-costs . The estimates are adjusted for the probability of the employee remaining in the Council ' s employment or other associated employment which would result in the Council being required to meet the liability . Adjustments are then made to allow for the proportion of the benefit earned to date , and the result is discounted to present value . The interest rates attaching to Commonwealth Government guaranteed securities at the reporting date are used to discount the estimated future cash outflows to their present value . This liability is reported in note 17 as a provision .
Where employees have met the prerequisite length of service and Council does not have an unconditional right to defer this liability beyond twelve months , long service leave is classified as a current liability . Otherwise it is classified as non-current .
1 . m Borrowings
Borrowings are initially recognised at fair value plus any directly attributable transaction costs . Subsequent to initial recognition these liabilities are measured at amortised cost .
Borrowing costs are expensed as they fall due for payment in line with their agreed loan repayment schedules .
1 . n Restoration Provisions
A provision is made for the cost of restoration in respect of refuse dumps and quarries where it is probable the Council will be liable , or required , to incur such a cost on the cessation of use of these facilities . The provision is measured at the expected cost of the work required , discounted to current day values using the interest rates attaching to Commonwealth Government guaranteed securities with a maturity date corresponding to the anticipated date of the restoration .
Within each restoration provision there may be many site locations some of which can be on council controlled land and some which are not . The following accounting treatments apply depending on the site location :
Restoration on land not controlled by Council
Where the restoration site is on State reserves which the Council does not control , the cost of the provisions for restoration of these sites has to be treated as an expense in the year the provision is first recognised . Changes in the provision due to either time , discount rate or expected future cost are treated as an expense or income in the reporting in which they arise .
Restoration on land controlled by Council
Restoration sites that are situated on Council controlled land and are classified as site improvement assets . The provision for restoration is , therefore , included as a site improvement asset . Changes in the provision not arising from the passing of time are added to or deducted from the asset revaluation surplus . If there is no available revaluation surplus ,
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