South African Local Government Association
Schedule 3A public entity i. t. o. the Public Finance Management Act, 1999 and recognised i. t. o. the Organised Local Government Act, 1997
Annual Financial Statements for the year ended 31 March 2017
Accounting Policies
1.4 Investment property( continued)
Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.
Subsequent measurement Subsequent to initial measurement, investment property is measured at fair value.
The fair value of investment property reflects market conditions at the reporting date.
A gain or loss arising from a change in fair value is included in net surplus or deficit for the period in which it arises.
Re-measurements to fair value are made annually to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period.
1.5 Property, plant and equipment
Property, plant and equipment are tangible noncurrent assets( including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used for more than one period.
Initial recognition and measurement
The cost of an item of property, plant and equipment is recognised as an asset when:
• it is probable that future economic benefits or service potential associated with the item will flow to the entity; and
• the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost.
The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.
Where an asset is acquired through a nonexchange transaction, its cost is its fair value as at date of acquisition.
Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value( the cost). If the acquired item’ s fair value was not determinable, its deemed cost is the carrying amount of the asset( s) given up.
When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items( major components) of property, plant and equipment.
The cost of an item of property, plant and equipment is recognised as an asset if and only if; i) it is probable that the future economic benefits or service potential associated with the item will flow to SALGA and the cost of fair value of the item can be measured reliably; and ii) where an asset is acquired at a cost that is less than a thousand Rand, its cost is fully depreciated in the period in which it is acquired.
Subsequent expenditure
Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
177 SALGA ANNUAL REPORT 2016 / 17