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.
Transfers from other government entities
Revenues from non-exchange transactions with other government entities are measured at
fair value and recognized on obtaining control of the asset (cash, goods, services and
property) if the transfer is free from conditions and it is probable that the economic benefits
or service potential related to the asset will flow to the LGU and can be measured reliably.
Revenue from exchange transactions
Rendering of services
The LGU recognize revenue from rendering of services by reference to the stage of
completion when the outcome of the transaction can be estimated reliably. The stage of
completion is measured by reference to labor hours incurred to date as a percentage of total
estimated labor hours.
Where the contract outcome cannot be measured reliably, revenue is recognized only to
the extent that the expenses incurred.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of
ownership have been transferred to the buyer, usually on delivery of the goods and when
the amount of revenue can be measured reliably and it is probable that the economic
benefits or service potential associated with the transaction will flow to the LGU.
Rental income
Rental income arising from the leases on properties is accounted for on a basis over per
transaction and revenue recognize upon receipt of rental payment.
3.4 Property, plant and equipment
All property, plant and equipment are stated at cost less accumulated depreciation and
impairment losses. 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 LGUs recognize such parts as individual assets with specific
useful lives and depreciate 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 or carrying value.
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