44 | Accord Housing Association
Other fixed assets and depreciation Other tangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses .
Depreciation is charged on a straight-line basis over the expected useful economic lives of fixed assets to write off the cost less estimated residual value . The estimated useful economic life for each component is as follows :
Freehold offices Furniture and equipment Computer equipment Leasehold improvements Plant and machinery
50 years 6 years
4 - 6 years In accordance with lease term
7 - 15 years
Gains or losses arising on the disposal of other tangible fixed assets are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised as part of the surplus / deficit for the year .
Stock and work in progress Stock and work in progress is measured at the lower of cost and estimated selling price less costs to complete and sell .
Debtors Short term debtors are measured at the transaction price , less any impairment .
Where deferral of payment terms have been agreed at below market rate , and where material , the balance is shown at the present value , discounted at a market rate .
Creditors Short term creditors are measured at the transaction price . Other financial liabilities , including bank loans , are measured initially at fair value , net of transaction costs , and are measured subsequently at amortised cost using the effective interest method .
Government Grants Government grants include grants receivable from Homes England , local authorities , and other government organisations . Government grants received for housing properties are recognised in income over the useful life of the housing property structure under the accruals model .
Grants relating to revenue are recognised in income and expenditure over the same period as the expenditure to which they relate once reasonable assurance has been gained that the association will comply with the conditions and that the funds will be received .
Government grants released on the sale of a property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the statement of financial position in creditors .
If there is no requirement to recycle or repay the grant on disposal of the asset , any unamortised grant remaining within creditors is released and recognised as income in income and expenditure .
Recycled Capital Grant Fund Grants repayable on property disposals are calculated in accordance with relevant Homes England procedures and included within a recycled capital grant fund . Interest is credited to the fund and calculated on a daily basis with the interest rate being determined by the level of total deposits .
The fund can be used in the same manner as a new project funded with social housing grant with certain permitted uses . It is intended to use the fund in the provision of either new social housing for rent and / or housing for sale on shared ownership terms or to supplement the major repair programme . Grants are repayable in certain specific circumstances including where the Homes England concludes that the association is unlikely to use the fund for a permitted purpose within three years . The fund is included within long term creditors .
Other Long Term Creditors Other long term creditors include the costs of arranging long term funding . These amounts are amortised over the period of the underlying financial instrument . Loan termination costs are charged to the statement of comprehensive income in the year in which they are incurred .
Provisions for Liabilities Provision are recognised when :
a ) There is a present obligation as a result of a past event ;
b ) It is probable the association will be required to settle the obligation ; and
c ) A reliable estimate of the obligation can be made .
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period , taking in to account the risks and uncertainties surrounding the obligation .
Where the effect of the time value of money is material , the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate . The unwinding of the discount is recognised as a finance cost in the statement of comprehensive income as it arises .
The association recognises a provision for annual leave accrued by employees as a result of services rendered in the current period , and which employees are entitled to carry forward and use within the next 12 months . The provision is measured as the salary cost payable for the period of absence .