Financial Statements 2020 | 43
Directly attributable administration costs are the labour costs arising from acquisition or construction , and the incremental costs which would have been avoided only if the property had not been constructed or acquired .
Stock acquired from other Housing Providers is recognised at cost at the point of acquisition and any related grant is recorded within deferred grant liabilities .
Works to existing properties which replace a component that has been treated separately for depreciation purposes , along with those works that result in an increase in net rental income over the lives of the properties , thereby enhancing the economic benefits of the assets , are capitalised as improvements .
The association separately identifies the major components which comprise its housing properties , and charges depreciation , so as to write-down the cost of each component on a straight line basis over its useful economic life .
Management reviews its estimate of the useful lives of depreciable assets at each reporting date based on the expected utility of the assets . Uncertainties in these estimates relate to changes to decent homes standards which may require more frequent replacement of key components . Accumulated depreciation as at 31 March 2020 was £ 95.5m .
The estimated useful economic life for each component is as follows :
Building Kitchen Bathroom Boiler & central heating Windows and doors Lifts ( where applicable )
Freehold land is not depreciated .
125 years 20 years 30 years 20 years 35 years 30 years
Leasehold properties are amortised over the life of the lease or the useful economic life , whichever is the shorter .
The association reviews its properties for indicators of impairment on an annual basis . Where such indicators are identified , an assessment for impairment is undertaken comparing the schemes carrying value to its recoverable amount . Where the carrying value is deemed to exceed the recoverable amount , the scheme is written down to its recoverable amount . The resulting impairment loss is recognised as operating expenditure .
Properties For Sale Expenditure on shared ownership properties is split proportionally between current and fixed assets based on the element relating to first tranche sales . The first tranche proportion is classed as a current asset and related sales proceeds are included in turnover , and the remaining element is classed as a fixed asset and is included in housing properties at cost , less any provision of depreciation or impairment . Further details are set out in note 13 .
Capitalisation of Interest Costs Interest on borrowings is charged to housing properties under construction up to the date of completion of each scheme . The interest charged is either on borrowing specifically for a scheme or net borrowings , to the extent that they are deemed to be financing a scheme based on the weighted average cost of capital . This treatment applies irrespective of the original purpose for which the loan was raised . Further details are set out in note 5 .
Other interest payable is charged to income and expenditure in the year .
Intangible Fixed Assets and Goodwill All business combinations are accounted for by applying the acquisition method . Goodwill represents the excess of the fair value of the consideration over the fair value of the assets , liabilities and contingent liabilities acquired on acquisition of subsidiaries . Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable .
Goodwill is stated at cost less accumulated amortisation and impairment losses . The estimated useful life of goodwill is between 10 and 20 years .
Other intangibles assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses .
Amortisation is charged to the consolidated statements of comprehensive income on a straight-line basis over the estimated useful lives of intangible assets . Other intangible assets are amortised from the date they are available for use . The estimated useful lives are as follows :
Customer contracts Computer software
10 - 20 years 4 years
The association reviews its intangible fixed assets and goodwill for indicators of impairment on an annual basis . Where such indicators are identified the resulting impairment is recognised as operating expenditure .
Donated Land Land donated by local authorities and others is added to cost at the fair value of the land at the time of the donation . Where the land is not related to specific development and is donated by a public body an amount equivalent to the increase in value between fair value and consideration treated as non-monetary government grant and recognised on the statement of financial position as deferred income within liabilities . Where the donation is from a non-public source , the value of the donation is included as income .