notes to the financial statements for the year ended 30 June 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of Accounting b) Historical Cost Convention (c) Transurban City Link Limited (d) Revenue Recognition e) Recoverable Amount of Non-Current Assets (f) Amortisation and Depreciation of Fixed Assets CityLink Fixed Assets Other Plant and Equipment g) Income Tax h) CPI Bonds 9 The financial statements are a general purpose financial report prepared in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views, the Corporations Act 2001 and the Trust Deed dated October 1995 (as amended). The financial statements are prepared on the basis of the historical cost convention and, except where stated, do not take into account current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. The fair value of cash consideration with deferred settlement terms is determined by discounting any amounts payable in the future to their present value as at the date of acquisition. Present values are calculated using rates applicable to similar borrowing arrangements of the economic entity.  The entity has not adopted a policy of revaluing its non-current assets on a regular basis. Transurban City Link Limited is referred to as the Company. Revenue for rental of land is recognised as earned in accordance with the lease contract. The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its continued use and subsequent disposal. The expected net cash flows included in determining recoverable amounts of non-current assets are discounted to their present value using  a market-referenced, risk-adjusted discount rate. Where net cash inflows are derived from a group of assets working together, the recoverable amount is applied to the relevant group of assets. Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revalued to its recoverable amount. Amounts classified as CityLink fixed assets are amortised over the estimated term of the Crown Lease granted to the Trust (currently 33 years and 6 months), or the assets estimated useful lives, whichever is less. Amortisation commenced with operations on 3 January 2000 and is calculated on a straight line basis. The period of amortisation is assessed annually. Leasehold Improvements included in CityLink fixed assets are depreciated on a straight line basis so as to write off the net cost of plant and equipment over their expected useful lives. Estimates of remaining useful lives will be made on a regular basis for all assets, with annual reassessments for major items. The expected useful lives are as follows: Leasehold Improvements 3 – 15 years Income tax has not been brought to account in the financial statements of the Trust as under the terms of the Trust Deed and pursuant to the provisions of the Income Tax Legislation, the Trust is not liable to income tax provided that its taxable income (including assessable realised capital gains) is fully distributed to unit holders.  The Trust has issued CPI Bonds which mature on 15 March 2023. The CPI Bond principal outstanding is adjusted for inflation, consistent with the provisions of the Income Tax Legislation. Financial instruments, in the form of interest rate swap contracts, are used to manage financial risks.  Gains and losses on interest rate swaps used as hedges are accounted for on the same basis as the interest payments they are hedging. Realised hedge gains and losses are brought to account in the statement of financial performance when the gains and losses arising on the related physical exposures are recognised. i) Financial Instruments