Useful lives and residual values
The useful lives and residual values of assets are assessed using the
following indicators to inform potential future use and value from
disposal:
a) The condition of the asset based on the assessment of experts
employed by the LGU;
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
Cash and short-term deposits, trade receivables, trade payables and other
current liabilities approximate their carrying amounts largely due to the
short-term maturities of these instruments;
Investments
The LGU limits its exposure to risk by investing in Authorized Depository
Banks.
Receivables
Receivables are amounts owed by consumers, and are presented net of
impairment losses.
Cash and cash equivalents
The LGU limits its exposure to credit risk by investing cash and cash
equivalents with only reputable financial institutions that have a sound
credit rating.
Liquidity risk
Liquidity risk is the risk of the LGU not being able to meet its obligations
as they fall due. The LGU’s approach to managing liquidity risk is to
ensure that sufficient liquidity is available to meet its liabilities when due.
The LGU ensures that it has sufficient cash on demand to meet expected
operating expenses through the use of cash flow forecasts.
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