and the asset recognition criteria are met. To the extent that there is a related
condition attached that would give rise to a liability to repay the amount,
liability is recognized instead of revenue. Other non-exchange revenues are
recognized when it is improbable that the future economic benefit or service
potential associated with the asset will flow to the entity and the fair value
of the asset can be measured reliably.
Revenue from exchange transactions
Interest income
Interest income is accrued using the effective yield method. The effective
yield discounts estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount. The method applies this
yield to the principal outstanding to determine interest income each period.
3.4 Property, plant, and equipment
All property, plant and equipment are stated at cost less accumulated
depreciation. Cost includes expenditure that is directly attributable to the
acquisition of the items. When significant parts of property, plant and
equipment 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 useful life
of the asset.
3.5 Intangible assets
Intangible assets acquired separately are initially recognized at cost. The
cost of intangible assets acquired in a non-exchange transaction is their fair
value at the date of the exchange. Following initial recognition, intangible
assets are carried at cost less any accumulated amortization and
accumulated impairment losses.
Intangible assets with a finite useful life are assessed for impairment
whenever there is an indication that the asset may be impaired. The
amortization period and the amortization method, for an intangible asset
with a finite useful life, are reviewed at the end of each reporting period.
Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are considered to modify
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