The Municipality 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 asset) 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 five-year transitional provision for the recognition of the Public Infrastructure.
In the first year of implementation of the IPSAS, the LGU did not recognize the Public
Infrastructure in the books of accounts.
e. Financial instruments
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 are classified as financial liabilities
at fair value through surplus or deficit or loans and borrowings, as appropriate. The
LGU determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and, in the case of loans
and borrowings.
The LGU’s financial liabilities include trade and other payables, loans and
borrowings
Subsequent measurement
The measurement of financial liabilities depends on their classification.
Financial liabilities at fair value through surplus or deficit
Financial liabilities at fair value through surplus or deficit include financial liabilities
designated upon initial recognition as at fair value through surplus or deficit.
Derecognition
A financial liability is derecognized when the obligation under the liability is
discharged, canceled, or expires.
When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability.
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