43
statements, both for the stage of completion reached on the contract and for the future work on the
contract. Amounts due in respect of claims and variations are recognised only when reasonable
evidence exists of their acceptability and counter claims and penalties are provided for in full.
(g) Property, plant and equipment
Initial recording
All items of property, plant and equipment are initially recognised at cost in the statement of
financial position. Cost includes the value of consideration exchanged, or fair value in the case of
donated or subsidised assets, and those costs directly attributable to bringing the item to working
condition for its intended use.
Subsequent expenditure
Subsequent expenditure relating to an item of property, plant and equipment is capitalised to the
initial cost of the item when the expenditure increases the economic benefits over the life of the
item or where that expenditure was necessarily incurred to enable the future economic benefits to
be obtained and the expenditure would have been included in the initial cost of the item had the
expenditure been incurred at the time of acquisition.
All other subsequent expenditure is expensed in the period in which it is incurred.
Revaluation
Land and buildings are revalued to fair value. Valuations are obtained from an independent
registered valuer every three years. Valuations may be obtained on a more frequent basis if there is
an indication that the fair values have changed materially from the latest valuation.
The basis of valuation is fair value, which is determined by reference to the assets' highest and
best use, without deducting disposal costs. Land and buildings acquired since the last revaluation
are recorded at historical cost. Revaluation surpluses are taken directly to the revaluation reserve.
Decreases in value are debited directly to the revaluation reserve to the extent that they reverse
previous surpluses within the class of asset concerned and are otherwise recognised as expenses
in the statement of financial performance.
Impairment
All items of property, plant and equipment are assessed for impairment at each reporting date.
Where the carrying amount is assessed to be greater than its recoverable amount, the item is
written down. The write-down is recognised in the statement of financial performance.
Depreciation
All items of property, plant and equipment, other than land, are depreciated on a straight line basis,
at rates which will write off their cost or revalued amount less estimated residual value, over their
expected useful lives.
Estimated useful lives of property, plant and equipment are as follows:
Years
Buildings
520
Plant and equipment
310
Motor vehicles
515
Furniture and fixtures
510
Computer equipment and software
210
Leased assets
Assets acquired under finance leases are depreciated on a straight line basis over the term of the
leases, or where ownership is transferred at the conclusion of the leases at no cost or at a bargain
price, over the expected useful life of the asset.
Intended for sale
Items of property, plant and equipment withdrawn from use and intended for sale are recorded at
the lower of carrying amount and net market value.
Disposal
On disposal or permanent withdrawal of an item of property, plant and equipment the difference
between the disposal proceeds (if any) and the carrying amount is recognised in the statement
of financial performance and the revaluation surplus is transferred from the revaluation reserve
directly to retained earnings.
