For each asset, an assessment is made at each reporting date as to whether there is any
indication that previously recognized impairment losses may no longer exist or may have
decreased. If such indication exists, the LGUs estimate the asset's recoverable service
amount. A previously recognized impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset’s recoverable service amount since
the last impairment loss was recognized. The reversal is limited so that the carrying amount
of the asset does not exceed its recoverable service amount, nor exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been
recognized for the asset in prior years. Such reversal is recognized in surplus or deficit.
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 LGUs
determine 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 LGUs financial liabilities include trade and other payables, loans and borrowings.
Subsequent measurement
The measurement of financial liabilities depends on their classification.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured
at amortized cost using the effective interest method. Gains and losses are recognized in
surplus or deficit when the liabilities are derecognized as well as through the effective
interest method amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition
and fees or costs that are an integral part of the effective interest rate.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged
or cancelled 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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