3.8 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash at bank and cash in bank special
saving deposit, deposits on call and highly liquid investments with an original maturity of
month, which are readily convertible to known amounts of cash and are subject to
insignificant risk of changes in value. For the purpose of the consolidated statement of cash
flows, cash and cash equivalents consist of cash and short-term deposits as defined above,
net of outstanding bank overdrafts.
3.9 Inventories
Inventory is measured at cost upon initial recognition. To the extent that inventory was
received through non-exchange transactions (for no cost or for a nominal cost), the cost of
the inventory is its fair value and or carrying value at the date of acquisition.
After initial recognition, inventory is measured at the lower of cost and net realizable value.
However, to the extent that a class of inventory is distributed or deployed at no charge or
for a nominal charge, that class of inventory is measured at the lower of cost and current
replacement cost.
Net realizable value is the estimated selling price in the ordinary course of operations, less
the estimated costs of completion and the estimated costs necessary to make the sale,
exchange, or distribution. Inventories are recognized as an expense when deployed for
utilization or consumption in the ordinary course of operations of the LGUs.
3.11 Changes in accounting policies and estimates
The LGUs recognize the effects of changes in accounting policy retrospectively. The
effects of changes in accounting policy are applied prospectively if retrospective
application is impractical.
The LGUs recognize the effects of changes in accounting estimates prospectively by
including in surplus or deficit.
3.12 Borrowing costs
Borrowing costs are capitalized against qualifying assets as part of property, plant and
equipment. Such borrowing costs are capitalized over the period during which the asset is
being acquired or constructed and borrowings have been incurred. Capitalization ceases
when construction of the asset is complete. Further, borrowing costs are charged to the
statement of financial performance.
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