3.4 Property, plant, and equipment (PPE)
All PPE 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 PPE parts are equipment are required to be replaced at intervals,
the LGU recognizes such parts as individual assets with specific useful lives and
depreciates 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.
Depreciation on assets is charged on a straight-line basis over the asset’s useful life.
Depreciation is charged at rates calculated to allocate cost or valuation of the asset
less any estimated residual value over its remaining useful life:
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.
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.
Rent received from an operating lease is recognized as income on a straight-line
basis over the lease term. Contingent rents are recognized as revenue in the period
in which they are earned.
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 LGU determines 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.
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