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 18. Other fixed assets and depreciation
Other tangible fixed assets are measured at cost less
accumulated depreciation and any accumulated
impairment losses.
Other interest payable is charged to income and
expenditure in the year. Freehold offices
50 years
Furniture and equipment
6 years
Computer equipment
4 - 6 years
Leasehold improvements
6 years
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 20 years.
Other intangible 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
20 years
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.
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
e conomic life for each component is as follows:
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.
Where there is evidence of impairment, fixed assets are
written down to recoverable amount, with the impairment
being charged to the Operating Surplus.
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 the
Homes and Communities Agency (the HCA), 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.
Financial Statements 2017
59