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 useful
life of the asset.
Depreciation is charged at rates calculated to allocate cost or valuation of
the asset less any estimated residual value over its remaining useful life.
Leased assets may consist of vehicles and machinery. The assets’ residual
values and useful lives are reviewed, and adjusted prospectively, if
appropriate, at the end of each reporting period. An asset’s carrying
amount is written down immediately to its recoverable amount, or
recoverable service amount, if the asset’s carrying amount is greater than
its estimated recoverable amount or recoverable service amount. The LGU
derecognizes items of property, plant and equipment and/or any significant
part of an asset upon disposal or when no future economic benefits or
service potential is expected from its continuing use. Any gain or loss
arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included
in the surplus or deficit when the asset is derecognized.
Public Infrastructures were not previously recognized in the books. The
LGU availed of the five-year transitional provision for the recognition of
the Public Infrastructure. For the first year of implementation of the
IPSAS, the LGU did not recognize the Public Infrastructure in the books
of accounts.
3.6 Financial instruments
Financial assets
Initial recognition and measurement
Financial assets are classified as financial assets at fair value through
surplus or deficit, loans and receivables, held-to-maturity investments or
available-for-sale financial assets, as appropriate. The LGU determines the
classification of its financial assets at initial recognition.
Purchases or sales of financial assets that require delivery of assets within
a time frame established by regulation or convention in the marketplace
(regular way trades) are recognized on the trade date, i.e., the date that the
LGU commits to purchase or sell the asset.
13
