Public Infrastructure was not previously recognized in the books. The LGU
availed of the 5-year transitional provision for the recognition of the public
infrastructure. For the first year of implementation of the PPSAS (2015), the
LGU did not recognize the public infrastructure in the books of accounts.
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.
Internally generated intangible assets, excluding capitalized development costs,
are not capitalized and expenditures are reflected in surplus or deficit in the
period in which the expenditures are incurred.
The useful life of the intangible assets is assessed as either finite or indefinite.
Intangible assets with a finite life are amortized over its useful life. Software is
amortized for 10-20 years.
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 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 Impairment of non-financial assets
Impairment of cash-generating assets
At each reporting date, the LGU assesses whether there is an indication that an
asset may be impaired. If any indication exists, or when annual impairment
testing for an asset is required, the LGU estimates the asset’s recoverable
amount. An asset’s recoverable amount is the higher of an asset’s cash-
generating unit’s fair value less costs to sell and its value in use and is
determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of
assets.
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