The Straight Line Method of depreciation is used in depreciating the Property,
Plant and Equipment with estimated useful lives ranging from five to fifty years.
A residual value, which is computed at ten percent of the cost of asset, is set
and depreciation starts on the second month after purchase.
Public Infrastructures were 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 IPSAS, the LGU will
not recognize the Public Infrastructure in the books of accounts.
3.5 Leases
LGU as a Lessor
Leases in which the LGU does not transfer substantially all the risks and
benefits of ownership of an asset are classified as operating leases. Initial direct
costs incurred in negotiating an operating lease are added to the carrying
amount of the leased asset and recognized over the lease term.
3.6 Financial instruments
Financial assets
Initial recognition and measurement
Financial assets are classified as financial assets at fair value through surplus or
deficit, loans and receivables, held-to-maturity investments or available-for-
sale financial assets, as appropriate. The LGU determines the classification of
its financial assets at initial recognition.
Purchases or sales of financial assets that require delivery of assets within a
time frame established by regulation or convention in the marketplace (regular
way trades) are recognized on the trade date, i.e., the date that the LGU commits
to purchase or sell the asset.
The LGU’s financial assets include: cash and short-term deposits only.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification.
Financial assets at fair value through surplus or deficit
Financial assets at fair value through surplus or deficit include financial assets
held for trading and financial assets designated upon initial recognition at fair
value through surplus and deficit. Financial assets are classified as held for
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