Notes to the Financial Statements: Notes about our Financial Position

Accounting policy

Trade debtors are recognised at the amounts due at the time of sale or service delivery. Settlement of these amounts is generally required within 30 days from invoice date.

The collectability of receivables is assessed periodically with an allowance being made for impairment.

In accordance with AASB 9 Financial instruments the department has assessed the historical trend of its receivables to calculate loss rates adjusted for forward-looking information. Historical rates are calculated using credit losses experienced during the past 10 years preceding 30 June 2025, adjusted by the unemployment rate, which is determined to be the most relevant forward-looking indicator for the department. The calculated lifetime expected credit loss allowance is then applied to trade receivables. No additional loss allowance has been recognised in the current financial year based on materiality.

All known bad debts were written off as at 30 June each year.

The department's annual and long service leave receivables relate to the Queensland Government's Annual Leave and Long Service Leave Central Schemes which are administered by QSuper on behalf of the state. Refer to Note 21.

Accounting policy

Intangible assets with a cost equal to or greater than $100,000 are recognised in the financial statements. Items with a lesser cost are expensed.

Expenditure on research activities relating to internally-generated intangible assets is recognised as an expense in the period in which it is incurred. Any training costs are expensed as incurred.

The department's intangible assets are not revalued as there is no active market for any of these assets. Such assets are recognised and carried at cost less accumulated amortisation and accumulated impairment losses.

For each class of intangible asset, the following amortisation rates are used:

The estimation of useful life and the resulting amortisation rates applied are based on a number of factors including expected usage, obsolescence, past experience and the department's planned replacement program. These are reviewed on an annual basis.

Accounting policy

Recognition threshold

All items of property, plant and equipment are recognised when the cost exceeds the following thresholds:

• Land $1
• Buildings $10,000
• Plant and equipment $5000
• Major plant and equipment $5000
• Infrastructure $10,000

All other items with a cost less than the above thresholds are expensed.

Acquisition

Actual cost is used for the initial recording of all non-current physical asset acquisitions. Cost is determined as the value given as consideration plus costs directly attributable to the acquisition, including all other costs incurred in preparing the assets ready for use.

Where assets are received free of charge from another Queensland Government entity as a result of a machinery-of-government or other involuntary transfer, the acquisition cost is recognised as the gross carrying amount in the books of the transferor immediately prior to the transfer, together with any accumulated depreciation.

Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining useful life of the asset.

Depreciation

For each class of property, plant and equipment other than infrastructure assets, the following depreciation rates are used:

Complex assets consist of significant separately identifiable components with different service lives, which are subject to regular replacement during the life of the complex asset. When the change in depreciation expense from separately identifying significant components is material to the class to which the assets relate, the significant components are separately identified and depreciated. The department's road infrastructure has a componentised structure as shown below.

The following depreciation rates are used for infrastructure sub-components:

The estimation of useful life and resulting depreciation rates are based on a number of factors including the department's past experience, the planned replacement program and expected usage, wear and tear, obsolescence and expected funding availability to the department. Useful lives are reviewed on an annual basis.

Where the confirmed available funding for the renewal and replacement of the department's road infrastructure assets varies from one year to the next, the sub-component remaining useful lives are subject to change as a consequence of the altered works program.

Accordingly an increase in funding allocated to asset renewal or replacement is likely to result in a corresponding proportionate increase in depreciation expense, and in accumulated depreciation, with a reduction in useful lives.

A reduction in funding is likely to have a similar impact in reducing depreciation expense and accumulated depreciation and increasing expected useful lives.

Formation earthworks initially have an indefinite life irrespective of work carried out on the surface and pavement components. Earthworks that are expected to be taken out of service or reconstructed are allocated a limited life and are depreciated in accordance with the requirements of AASB 116 Property, Plant and Equipment.

Land under roads

The aggregate value of land under roads is measured and disclosed as land until road declarations for each land portion are confirmed.

Where a road declaration is confirmed, the title is extinguished and ownership reverts to the state represented by the Department of Natural Resources and Mines, Manufacturing and Regional and Rural Development in accordance with Queensland Government policy.

Non-current assets classified as held for sale

Non-current assets held for sale consist of those assets that management has determined are available for immediate sale in their present condition, and for which their sale is highly probable within the next twelve months.

In accordance with AASB 5 Non-current Assets Held for Sale and Discontinued Operations, when an asset is classified as held for sale its value is measured at the lower of the asset's carrying amount and fair value less costs to sell. Such assets are no longer amortised or depreciated upon being classified as held for sale.

Fair value measurement

All assets and liabilities of the department for which fair value is measured or disclosed in the financial statements, are categorised within the following fair value hierarchy, based on the data and assumptions used in the most recent specific appraisals:

• Level 1 – represents fair value measurements that reflect unadjusted quoted market prices in active markets for identical assets and liabilities
• Level 2 – represents fair value measurements that are substantially derived from inputs other than quoted prices included within level 1 that are observable, either directly or indirectly
• Level 3 – represents fair value measurements that are substantially derived from unobservable inputs.

Valuation of property, plant and equipment

Plant and equipment assets and capital work in progress are measured at cost in accordance with Queensland Treasury's Non-Current Asset Policies for the Queensland Public Sector.

Land, buildings, major plant and equipment and infrastructure assets are measured and reported at their revalued amounts, being the fair value at the date of valuation, less any subsequent relevant accumulated depreciation and accumulated impairment.

The cost of items acquired during the financial year materially represent their fair value at the end of the reporting period.

Road infrastructure assets are valued on an annual basis by suitably qualified departmental officers and external experts. Land, buildings, major plant and equipment and other infrastructure assets are assessed by qualified valuers on a rolling revaluation basis at least once every five years with appropriate indices being applied in the intervening years.

Any revaluation increment arising on the revaluation of an asset is credited to the asset revaluation surplus of the appropriate class, except to the extent it reverses a revaluation decrement for the class previously recognised as an expense. A decrease in the carrying amount on revaluation is charged as an expense, to the extent it exceeds the balance, if any, in the revaluation surplus relating to that class.

For assets revalued using a cost valuation approach accumulated depreciation is adjusted to equal the difference between the gross amount and carrying amount.

For assets revalued using a market or income based valuation approach accumulated depreciation is eliminated against the gross amount of the asset prior to restating for the revaluation.

Land

The department's land was last revalued based on specific appraisal by external valuers and the department's Property Branch effective from September 2020.

In accordance with the department's rolling comprehensive revaluation schedule, all of the department's land has been indexed in 2025. The department engaged an external supplier and subcontracted qualified valuers to determine individual factor changes for each property to assess the fair value of the land. In determining indices, the valuation incorporated market sales data, land valuations issued by the Valuer-General, the location of the department's land, its size, shape, street or road frontage and access and any other significant restrictions.

In accordance with AASB 13 Fair Value Measurement, the department's land assets are generally categorised as level 2.

Land subject to restrictions due to its size or use, and or ability to be sold, such as land located in areas where there is not an active market, has been classified as level 3.

Buildings

The department's buildings were last revalued based on specific appraisal by various external valuers and registered valuers from the department's Property Branch effective from September 2020.

Based on information provided by external valuers, all of the department's buildings were indexed in 2025 in line with the department's rolling comprehensive revaluation schedule.

The department's building assets are categorised as a combination of level 2 and level 3 in accordance with AASB 13 Fair Value Measurement. Significant buildings not used for residential purposes without an active market have been classified as level 3.

Major plant and equipment

The department's major plant and equipment was last comprehensively revalued based on specific appraisal by an external valuer effective from September 2020.

The valuation method used is current replacement cost as there is no active market existing for such assets. The approach consists of reviewing recent local and international rolling stock contracts adjusted for the relevant producer price index and historical exchange rates.

The department's major plant and equipment was revalued in 2025 based on indexation information provided by an external valuer.

Significant judgement is also used to assess the remaining service potential of the assets, including current condition.

In accordance with AASB 13 Fair Value Measurement, major plant and equipment assets are categorised as level 3.

Infrastructure

A full management valuation of the road infrastructure network asset as at 31 March 2025 was completed by suitably qualified and experienced departmental engineers and staff. The valuation methodology adopted to calculate fair value is based on the cost to acquire the service potential embodied in an asset and adjusted to reflect the asset's present condition, functionality, technological and economic obsolescence. This is the estimated cost to replace an asset with an appropriate modern equivalent using current construction materials and standards, adjusted for changes in utility and service level.

The valuation involves a resource-based assessment to develop unit rates that provide a sound representation of the cost of replacing the service potential embodied in the asset. This process utilises the following key assumptions and judgements:

• Stereotypical roads – The road network is broken down into stereotypical roads as a way of standardising the complexities involved in road construction. The department estimates 13 different road stereotypes based on the road segments' complexity in relation to the number and width of traffic lanes, standard of construction (based on date), number of carriageways, age of construction, and location (rural or urban). Stereotypes range from unsealed roads through to major motorways and busways and are further defined by complex category and sub-category mapping (for example, terrain – rolling, level, mountainous).
• Project work breakdown structure (WBS) – Each stereotype is supported by a complex breakdown of WBS schedules representing the types of projects that would be undertaken to replace and renew relevant asset components. As WBS represent a standardised road construction, assumptions are made on the area used for each WBS. The areas have been determined by a firm of consultant engineers and are reviewed and updated as necessary. There is a small number of derived WBS schedules that are based on other similar WBS instead of their own schedule of work activities.
• Unit rates – The unit rates applied to stereotypical roads are priced by an expert estimating firm using current market rates of inputs such as raw materials, plant and labour to underpin the detailed WBS schedules representing the way in which certain stereotypical roads would be replaced. Inputs are sourced directly from suppliers and subcontractors competing in the marketplace in Queensland.
  
  The unit rates, including underlying assumptions and specific details contained in the stereotypes, are ratified annually by an expert panel consisting of engineers and staff from a range of disciplines across the department in conjunction with local government and industry.

Remaining useful lives are estimated using past experience as detailed in the department's road condition models and in the extensive rule set that is applied to determine when an appropriate works intervention will occur. Consideration is also given to planned replacement programs as a result of observation of road use deterioration and environmental factors such as:

• Traffic volume
• Rutting
• Cracking
• Roughness
• Safety
• Number of years in use.

To ensure the reported carrying amount of the department's road infrastructure assets are not materially different from their market value at reporting date, market sensitivity assessments were undertaken between the valuation date and 30 June.

As there is no active market for the department's infrastructure assets, the valuation approach used is current replacement cost. This is the assets' measurement of their highest and best use. While the unit rates database consists of market derived component costs which includes raw materials and other costs of construction (level 2 inputs), there are also significant level 3 unobservable inputs such as useful life and asset condition which require extensive professional judgement. Differences in the assessment of these level 3 inputs would not result in material changes in the reported fair value.

The department determines the current replacement cost of structures on the infrastructure network through an approach that takes into consideration an expert review of actual construction costs and resource rates to replace existing bridges, tunnels and major culverts. This is achieved by referencing past works of similar construction method and moderating for changes in market movements through a combination of market indexation and referencing of recent actual construction costs and resource rates.

Unit rates for the current replacement cost of bridges and tunnels are derived from a combination of the current and prior four years' project costs and other departmental system reports, and market indexation, moderated by internal engineering experts. Unit rates for the current replacement cost of major culverts are derived from resource rates and use of the Expert Estimation tool, moderated by internal engineering experts. These unit rates are then certified by the department's Deputy Chief Engineer (Structures).

The department's other infrastructure assets were either indexed or comprehensively revalued during 2025. In accordance with the rolling comprehensive revaluation schedule, a range of assets were subject to specific appraisal as of September 2024 by an external valuer. This specific appraisal used a costing database similar to the unit rates process used for road infrastructure. The remaining other infrastructure assets were revalued as of December 2024 using suitable indices confirmed by external valuers.

As with the department's road infrastructure assets, there is no active market for other infrastructure. Therefore current replacement cost is the measurement of the other infrastructure assets highest and best use.

In accordance with AASB 13 Fair Value Measurement, the department's infrastructure assets are categorised as level 3.

As the department is a not-for-profit entity with no cash generating units, impairment under AASB 136 Impairment of Assets is unlikely to arise, since property, plant and equipment is carried at fair value or an amount that approximates fair value in rare circumstances.

Accounting policy

Service concession assets are measured at current replacement cost on initial recognition or reclassification, and are subsequently measured at fair value determined using current replacement cost.

Assets under service concession arrangements were last revalued by suitably qualified and experienced departmental engineers and various external valuers during the 2020–21 financial year. Assets under service concession arrangements consist of major plant and equipment, plant and equipment, buildings and infrastructure asset classes.

During 2025 the fair values of assets for the Gold Coast Light Rail – G:link, Toowoomba Bypass, Airportlink and Brisbane Airport Rail Link were remeasured using suitable indices. A full management valuation as at 31 March 2025 was completed by suitably qualified and experienced departmental engineers and staff for Gateway Motorway, Logan Motorway and Port Drive assets.

Major plant and equipment, plant and equipment, buildings and infrastructure asset measurement and valuation methodologies are disclosed in Note 15.

The current replacement cost valuation of infrastructure assets undertaken by external valuers takes into consideration the cost of a similar standard asset providing the same functionality in the same location. The new asset is assumed to be constructed to current standards however with no additional functionality.

To ensure the reported carrying amount of the department's service concession assets are not materially different from their market value at reporting date, market sensitivity assessments were undertaken between the valuation date and 30 June.

In accordance with AASB 13 Fair Value Measurement, the department's service concession assets are categorised as level 3.

Straight-line depreciation has been applied to all depreciable asset components and the following depreciation rates are applied in each arrangement:

Accounting policy

Right-of-use assets

Right-of-use assets are initially recognised at cost comprising the following:

• the amount of the initial measurement of the lease liability
• lease payments made at or before the commencement date, less any lease incentives received
• initial direct costs incurred
• the initial estimate of restoration costs.

Right-of-use assets are subsequently depreciated over the lease term and are subject to impairment testing on an annual basis.

The carrying amount of right-of-use assets are adjusted for any remeasurement of the lease liability in the financial year following a change in discount rate, a reduction in lease payments payable, changes in variable lease payments that depend upon variable indexes on rates or a change in lease term.

In accordance with Queensland Treasury policy, the department does not recognise right-of-use assets and lease liabilities from short-term leases and leases of low value assets. Short term leases are for periods less than 12 months and low value assets are those that cost less than $10,000 when new. Payments for these leases are expensed on a straight-line basis over the lease term.

Lease liabilities

Lease liabilities are initially recognised at the present value of lease payments over the lease term that are not yet paid. The lease term includes any extension or renewal options that the department is reasonably certain to exercise. The future lease payments included in the calculation of the lease liability comprise the following:

• fixed payments including in-substance fixed payments, less any lease incentives receivable
• variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date
• amounts expected to be payable by the department under residual value guarantees
• the exercise price of a purchase option that the department is reasonably certain to exercise
• payments for termination penalties, if the lease term reflects the early termination.

When measuring the lease liability, the department uses its incremental borrowing rate as the discount rate where the interest rate implicit in the lease cannot be readily determined, which is the case for all of the department's leases under AASB 16 Leases. To determine the incremental borrowing rate, the department uses loan rates provided by Queensland Treasury Corporation that correspond to the commencement date and term of the lease.

Accounting policy

The department recognises lease payments from operating leases as income on a straight-line basis over the lease term.

Accounting policy

The department's standard payment terms are 28 days from vendor invoice date where the business is not a registered small business. Where the vendor is registered as a small business, the Queensland Government On-Time Payment Policy applies, and the standard terms offered will be 20 days from vendor invoice date. Standard terms may be varied where there is a benefit to the department, or where there is a legislative or contractual requirement.

Other payables such as grants and subsidies and property resumptions have varying settlement terms.

Accounting policy

Provisions are recorded when the department has a present obligation, either legal or constructive as a result of a past event. They are recognised at the amount expected at reporting date for which the obligation will be settled in a future period. Provisions are reviewed at each reporting date to ensure the amounts accurately reflect the best estimate available.

Accounting policy

Annual leave and long service leave

Under the Queensland Government's Annual Leave Central Scheme and Long Service Leave Central Scheme, a levy is made on the department to cover the cost of employees' annual leave and long service leave entitlements. The levies are expensed in the period in which they are payable. Amounts paid to employees for annual leave and long service leave are claimed from the schemes quarterly in arrears.

No provision for annual leave or long service leave is recognised in these financial statements. The liabilities are held on a whole-of-government basis and are reported by Queensland Treasury.

Sick leave

Prior history indicates that on average, sick leave taken each reporting period is less than the entitlement accrued. This is expected to continue in future periods. Accordingly, it is unlikely that existing accumulated entitlements will be used by employees and no liability for unused sick leave entitlements is recognised.

As sick leave is non-vesting, an expense is recognised for this leave as it is taken.

Superannuation

Post-employment benefits for superannuation are provided through defined contribution (accumulation) plans or the Queensland Government's QSuper defined benefit plan as determined by the employee's conditions of employment. The former QSuper defined benefit categories are now administered by the Government Division of the Australian Retirement Trust.

Contributions are made to eligible complying superannuation funds based on the rates specified in the relevant enterprise bargaining agreement or other conditions of employment. Contributions are expensed when they are paid or become payable following completion of the employee's service each pay period.

The liability for defined benefits is held on a whole-of-government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting. The amount of contributions for defined benefit plan obligations is based upon the rates determined on the advice of the State Actuary. Contributions are paid by the department at the specified rate following completion of the employee's service each pay period. The department's obligations are limited to those contributions paid.