Statement of Accounts 2020 / 21
Statement of Accounting Policies ( continued ) For the year ended 31 July 2021
Leases ( continued ) Operating leases
Costs in respect of operating leases are charged on a straight-line basis over the lease term . Any lease premiums or incentives are spread over the lease term .
10 . Service Concession Arrangements
Fixed assets held under service concession arrangements are recognised in the Balance Sheet at the present value of the minimum lease payments when the assets are bought into use with a corresponding financial liability .
Payments under the service concession arrangement are allocated between service costs , finance charges and financial liability repayments to reduce the financial liability to nil over the life of the arrangement .
The Keele Residential Fund agreement is not treated as a service concession arrangement , and as such no financial liability was created and the Halls of Residence were valued in use as part of fixed assets .
11 . Foreign currency
Transactions in foreign currencies are converted into sterling at the foreign exchange rate ruling at the date of the transaction . Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to sterling at the foreign exchange rate ruling at that date . Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income and Expenditure .
12 . Accounting for Research and Development
Expenditure on pure and applied research is treated as a part of the continuing activities of the University . Expenditure on development activities is carried forward and amortised over the period expected to benefit .
13 . Fixed assets Fixed assets are stated at deemed cost less accumulated depreciation .
Land and Buildings
Land and buildings are capitalised at cost on initial recognition . After initial recognition land and buildings are subsequently measured at cost less accumulated depreciation and accumulated impairment losses . Certain items of land and buildings that had been revalued to fair value on transition to the 2015 FE HE SORP , are measured on the basis of deemed cost , being the revalued amount at the date of that revaluation . Costs incurred in relation to land and buildings after initial purchase or construction are capitalised to the extent that they increase the expected future benefits to the Group .
Freehold land is not depreciated as it is considered to have an indefinite useful life . Freehold buildings are depreciated by component from the date of completion over their expected useful economic lives (“ UEL ”) on a straight-line basis as follows :
Structure Plant and Machinery Fit Out Refurbishments
50 years 25 years
3 - 15 years 10 years
Where an item of land and buildings comprise two or more major components with substantially different UEL ’ s , each component is accounted for separately and depreciated over its individual UEL . Expenditure relating to subsequent replacement of components is capitalised as incurred to the extent that they increase the expected future benefits to the University .
Leasehold land and buildings are depreciated over the life of the lease up to a maximum of 50 years .
No depreciation is charged on assets in the course of construction .
Depreciation methods , useful lives and residual values are reviewed at the date of preparation of each Balance Sheet .
Equipment and Furniture
Equipment , including computers and software , and furniture costing less than £ 20,000 is written off to the Statement of Comprehensive Income and Expenditure in the year of acquisition . All other equipment is capitalised , including equipment used for research . Capitalised equipment and furniture is stated at cost and depreciated from the month of purchase over its expected useful life of between 1 to 10 years . Equipment acquired for specific research projects is written off over the same length as the remaining research project life , in order to better match depreciation and usage .
Depreciation methods , useful lives and residual values are reviewed at the date of preparation of each Balance Sheet .
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