3.11 Budget Information
The annual budget is prepared on the modified cash basis, that is, all planned
costs and income are presented in a single statement to determine the needs of
the LGU. As a result of the adoption of the Modified cash basis for budgeting
purposes, there are basis, timing or entity differences that would require
reconciliation between the actual comparable amounts and the amounts
presented as a separate additional financial statement in the statement of
comparison of budget and actual amounts. Explanatory comments are
provided in the notes to the annual financial statements; first, the reasons for
overall growth or decline in the budget are stated, followed by details of
overspending or underspending on line items.
3.12 Significant judgments and sources of estimation uncertainty
Judgments
In the process of applying the LGU’s accounting policies, management has
made judgments, which have the most significant effect on the amounts
recognized in the consolidated financial statements.
Estimates and assumptions
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are described below. The LGU based its
assumptions and estimates on parameters available when the consolidated
financial statements were prepared. However, existing circumstances and
assumptions about future developments may change due to market changes or
circumstances arising beyond the control of the LGU. Such changes are
reflected in the assumption when they occur.
Useful lives and residual values
The useful lives and residual values of assets are assessed using the following
indicators to inform potential future use and value from the disposal.
a) The condition of the asset based on the assessment of experts
employed by the LGU;
b) The nature of the asset, its susceptibility, and adaptability to changes
in technology and processes;
c) The nature of the processes in which the asset is deployed; and
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