(b) The nature of the asset, its susceptibility and adaptability to changes in technology and
processes:
(c) The nature of the processes in which the asset is deployed; and
(d) Changes in the market in relation to the asset
Impairment of non-financial assets – non- cash generating assets
The LGUs review and tests the carrying value of non-cash-generating assets when events
or changes in circumstances suggest that there may be a reduction in the future service
potential that can reasonably be expected to be derived from the asset. Where ind icators of
possible impairment are present, the LGUs undertake impairment tests, which require the
determination of the fair value of the asset and its recoverable service amount. The
estimation of these inputs into the calculation relies on the use estimates and assumptions.
Any subsequent changes to the factors supporting these estimates and assumptions may
have an impact on the reported carrying amount of the related asset.
3.16.Impairment Loss
For the year ended December 31, 2015, as the transition period of converting accounting
policies from New Government Accounting System (NGAS) to Philippine Public Sector
Accounting Standards (PPSAS) there was no recorded provision for impairment of any
assets.
Investments
The LGUs limit its exposure to credit risk by investing with only reputable financial
institutions that have a sound credit rating (rated BB and above), which are within the
specific guidelines set in accordance with the LGUs Finance Committee and the
Sanggunian approved investment policy. Consequently, the LGUs do not consider there to
be any significant exposure to credit risk.
Receivables
Receivables are amounts owed by consumers and are presented net of impairment losses.
The LGUs have a credit risk policy in place, and the exposure to credit risk is monitored
on an ongoing basis. The LGUs are compelled, by its constitutional mandate, to provide
all of its residents with basic minimum services, without recourse to an assessment of
creditworthiness. There were no material changes in the exposure to credit risk and its
objectives, policies and processes for managing and measuring the risk during the year
under review.
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