Interest income
Interest income represents the interest earned from the depository banks and is
presented net of taxes. Interest is earned on a quarterly basis.
3.4 Property, plant and equipment (PPE)
All PPE are stated at cost less accumulated depreciation. Cost includes
expenditure that is directly attributable to the acquisition of the items. When
significant parts of PPE are required to be replaced at intervals, the LGU
recognizes such parts as individual assets with specific useful lives and
depreciates them accordingly. Likewise, when a major inspection is performed,
its cost is recognized in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All other repair and
maintenance costs are recognized in surplus or deficit as incurred. Where an
asset is acquired in a non-exchange transaction for nil or nominal consideration
the asset is initially measured at its fair value.
Depreciation on assets is charged on a straight-line basis over the asset’s useful
life.
Depreciation is charged at rates calculated to allocate the cost or valuation of
the asset less any estimated residual value over its remaining useful life.
Public Infrastructures were not previously recognized in the books. The LGU
availed of the 5-year transitional provision for the recognition of the Public
Infrastructure. For the first year of implementation of the PPSAS, the LGU did
not depreciate. All assets transferred from Trust Funds and other Assets were
not depreciated as well.
3.5 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash at bank, deposits on
call, and highly liquid investments with an original maturity of three months or
less, which are readily convertible to known amounts of cash and are subject to
an insignificant risk of changes in value. For the purpose of the consolidated
statement of cash flows, cash and cash equivalents consist of cash and short-
term deposits as defined above, net of outstanding bank overdrafts.
3.6 Inventories
Inventory is measured at cost upon initial recognition. To the extent that
inventory was received through non-exchange transactions (for no cost or for a
nominal cost), the cost of the inventory is its fair value at the date of acquisition.
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