the amortization period or method, as appropriate, and are treated as
changes in accounting estimates. The amortization expense on an intangible
asset with a finite life is recognized in surplus or deficit as the expense
category that is consistent with the nature of the intangible asset.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the surplus or deficit
when the asset is derecognized.
3.6 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.
3.7 Related parties
The LGU regards a related party as a person or an entity with the ability to
exert control individually or jointly, or to exercise significant influence over
the LGU, or vice versa. Members of key management are regarded as
related parties and comprise the Governor, Mayors, Vice-Governors and
Vice-Mayors, Sanggunian Members, Committee Officials and Members,
Accountants, Treasurers, Budget Officers, General Services and all Chiefs
of Departments/Divisions.
3.8 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.
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