|The valuation impact is calculated as the movement in the fair value as a result of the change in the assumption and keeping all other valuation inputs constant.
A significant amount of management judgement is used when determining the useful lives of the Group's generation assets for depreciation purposes. This is especially so for the Group's longer lived assets.
If the estimated useful lives of generation assets were 10% higher/lower, operating profit for the year would have increased/(decreased) by $5,278,000/$(6,451,000) (2012: $4,804,000/$(5,872,000)).
Management judgement is used when determining the useful lives of the Group's intangible assets for amortisation purposes.
If the estimated useful lives of intangible assets were 10% higher/lower, operating profit for the year would have increased/decreased by $721,000/$(881,000) (2012: $478,000/$(584,000)).
Income tax expense
The Group is subject to income taxes in New Zealand and Australia. Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
Provision against advances to subsidiaries
For subsidiaries involved in generation development, the Parent fully provides for advances made until such time as a viable project is identified and construction commences. This provision is the result of significant uncertainty that economic projects will be completed and that the advances will be recoverable.
Changes to accounting estimates
Apart from the change in metering asset useful lives (refer note 2.6), there have been no changes to accounting estimates in the year.