3.5 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash in bank. 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.
Contingent liabilities
The LGU does not recognize a contingent liability, but discloses details of any
contingencies in the notes to the financial statements, unless the possibility of an
outflow of resources embodying economic benefits or service potential is
remote.
Contingent assets
The LGU does not recognize a contingent asset, but discloses details of a
possible asset whose existence is contingent on the occurrence or non-
occurrence of one or more uncertain future events not wholly within the control
of the LGU in the notes to the financial statements. Contingent assets are
assessed continually to ensure that developments are appropriately reflected in
the financial statements. If it has become virtually certain that an inflow of
economic benefits or service potential will arise and the asset’s value can be
measured reliably, the asset and the related revenue are recognized in the
financial statements of the period in which the change occurs.
3.7 Changes in accounting policies and estimates
The LGU recognizes the effects of changes in accounting policy retrospectively.
The effects of changes in accounting policy are applied prospectively if
retrospective application is impractical.
The LGU recognizes the effects of changes in accounting estimates
prospectively by including in surplus or deficit.
3.8 Borrowing costs
Borrowing costs are capitalized against qualifying assets as part of property,
plant and equipment. Such borrowing costs are capitalized over the period
during which the asset is being acquired or constructed and borrowings have
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