(1) This Procedure is applied in accounting for property, plant and equipment including the following categories: (2) This Procedure does not apply to property, plant and equipment classified as held for sale in accordance with the Non-current Assets Held for Sale and Discontinued Operations Policy. (3) Refer to the Accounting (Financial) Policy. (4) Refer to the Accounting (Financial) Policy. (5) The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if: (6) Sufficient certainty that future economic benefits will flow to the University is normally achieved only when the risks and rewards of the asset have passed on to the University. In practice, this often occurs when the asset is delivered. (7) The University does not recognise in the carrying amount of property, plant and equipment the costs of the day-to-day servicing of the item. These costs are recognised in the income statement as incurred. (8) Land, works of art and rare books that qualify for recognition as an asset are measured at cost on acquisition. The cost of acquisition includes both the purchase price and other directly attributable costs. (9) Land and buildings are accounted for separately, even when they are acquired together. (10) Where an asset is acquired for no cost, or for a nominal cost, the cost recorded reflects the fair value as at the date of acquisition. (11) After initial recognition, these assets are measured at their revalued amounts. The revalued amounts are their fair values based on valuations performed by a qualified valuer. (12) Revaluations are carried out annually to ensure that the carrying amount does not differ materially from the revalued amount. (13) Land, works of art and rare books are not depreciated due to their estimated unlimited useful life. (14) Buildings and student accommodation that qualify for recognition as an asset are initially measured at cost. (15) The cost of buildings and student accommodation comprises: (16) Where an item of building and student accommodation is acquired for no cost, or for a nominal cost, the cost recorded reflects the fair value as at the date of acquisition. (17) After initial recognition as assets, buildings and student accommodation are carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and impairment losses. (18) Revaluations are carried out annually to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date. (19) When an item of building or student accommodation is revalued, any accumulated depreciation at the date of the revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount. (20) Depreciation on buildings is calculated using the straight line method to allocate each building component’s cost or revalued amounts, net of their residual values, over their estimated useful lives, as follows: (21) Depreciation on student accommodation is calculated using the straight line method to allocate their costs or revalued amounts, net of their residual values, over their estimated useful lives of 40 years. (22) The University enters into PPP with the private sector in relation to the construction and operation of new student accommodation. Each individual PPP is accounted for in accordance with its substance and economic reality, and not merely its legal form. The University recognises the new building that is the subject of the PPP as an asset only when it determines it has the majority of the risks and benefits in relation to those buildings. Land leased to the private sector and any other service elements that are part of the PPP, but are not the buildings, are accounted for separately in accordance with the accounting policy for land. (23) Leasehold Improvements that qualify for recognition as an asset are initially measured at cost. (24) The cost of leasehold improvement comprises: (25) After initial recognition as assets, leasehold improvements are carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and impairment losses. (26) Revaluations are carried out annually to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the reporting date. (27) When a leasehold improvement is revalued, any accumulated depreciation at the date of the revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount. (28) Depreciation on leasehold improvements is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives. The useful life of leasehold improvement is usually, depending on the leasing agreements, between 5 and 40 years. (29) Equipment and other tangible assets that qualify for recognition as an asset are initially measured at cost. (30) The cost of equipment and other tangible assets comprises: (31) After the initial recognition of an asset, equipment and other tangible assets are stated at cost less any accumulated depreciation and impairment losses. (32) Depreciation on equipment and other tangible assets is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives. See table above. (33) The fair value of items of property, plant and equipment is usually determined from market- based evidence by an appraisal that is normally undertaken by a qualified valuer. Where there is no market-based evidence of fair value, because of the specialised nature of items of property, plant and equipment and because the items are rarely sold except as part of a continuing business, they are valued using the replacement cost approach. (34) Please refer to Appendix I for the Fair Value decision tree. (35) If the carrying amount of a class of assets is increased as a result of a revaluation, the net revaluation increase is credited directly to equity under the heading of revaluation reserve. However, the net revaluation increase is recognised in the income statement to the extent that it reverses a net revaluation decrease of the same class of assets previously recognised in the income statement. (36) If the carrying amount of a class of assets decreased as a result of the revaluation, the net revaluation decrease is recognised in the income statement. However, the net revaluation decrease is debited directly to equity under the heading of revaluation reserve to the extent of any credit balance existing in any revaluation reserve in respect of that same class of asset. (37) Revaluation increases and revaluation decreases relating to individual assets within a class of property, plant and equipment shall be offset against one another within that class but shall not be offset in respect of assets in different classes. (38) The revaluation reserve included in equity in respect of an item of property, plant and equipment is transferred directly to retained earnings when the asset is derecognised. (39) An impairment assessment is made each year when there is any indication that an asset is impaired. If the recoverable amount is below an asset’s carrying amount, the asset is written down to its recoverable amount. (40) Please refer to the Asset Procedure - Impairment of Assets Accounting for more details. (41) The carrying amount of an item of property, plant and equipment shall be derecognised: (42) The gain or loss arising from the de-recognition of an item of property, plant and equipment shall be included in the income statement when the item is derecognised. It is determined by comparing net disposal proceeds with the carrying amount. When revalued assets are sold, the amounts included in property, plant and equipment revaluation reserves in respect of those assets shall be transferred to retained surplus.Accounting Procedure - Property, Plant and Equipment
Section 1 - Background and Purpose
Section 2 - Scope
Section 3 - Policy Statement
Section 4 - Procedure
Recognition Criteria
Land, Works of Art and Rare Books
Initial Recognition
Subsequent Measurement
Depreciation
Buildings and Student Accommodation
Initial Recognition
Subsequent Measurement
Depreciation
Asset Class
Useful Life (Yrs.)
Buildings
50
Infrastructure
20
Leasehold Improvements
Yrs./LOL
Library Books and E- resources
10
Plant & Equipment 10YR
10
Plant & Equipment 20YR (New)
20
Furniture, Fixtures & Office Equipment
10
Motor Vehicles (Commercial)
10
Motor Vehicles (Passenger)
15
Hardware (Computer/Technical)
3
Software (10YR)
10
Software (5YR) (New)
5
Public Private Partnerships (PPP)
Leasehold Improvement
Initial Recognition
Subsequent Measurement
Depreciation
Equipment and Other Tangible Assets
Initial Measurement
Measurement Subsequent to Initial Recognition
Depreciation
Fair Value Valuation
Basis of Valuation
Revaluation Gains and Losses
Impairment
De-Recognition
Section 5 - Definitions
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This is not a current document. It has been repealed and is no longer in force.