The LGU derecognizes items of property, plant and equipment and/or any
significant part of an asset upon disposal or when no future economic benefits or
service potential is expected from its continuing use. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the assets) is included in the surplus or deficit
when the asset is derecognized.
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 will not recognize the Public Infrastructure
in the books of accounts.
3.11 Financial Liabilities
The LGU’s financial liabilities include payables and borrowings which the
municipality is committed to pay for goods or services received. It also include
amounts entrusted/withheld from outside sources/offices and personnel for which
the municipality is acting as a trustee or administrator.
Payables were recognized and recorded in the book of accounts only upon
acceptance of goods and rendition of service to the municipality.
Loans contracted by the municipality were recognized upon receipt of the proceeds
from creditors.
3.12 Equity
Equity represents the difference between assets and liabilities. The amount
available for operations is computed by deducting the following from other ending
balances of Government Equity.
a. equity set aside to finance capital projects with appropriations provided in the
previous years (continuing appropriations)
b. portion pertaining to receivables, inventories, prepayments, and other current
assets
c. portion pertaining to property, plant, and equipment, including public
infrastructures in process
d. amount reserved for Local Disaster Risk Reduction & Management Fund
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