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
1.5 Property, plant and equipment( continued)
IT equipment is not currently componentised as no component accounting is considered necessary due to the nature of the computer information.
Expenditure relating to ongoing maintenance( which does not meet the recognition criteria), IT support and customisation is expensed in the statement of financial performance as and when incurred.
Purchased software is recognised at cost, including all direct costs associated with the customisation and installation thereof.
Motor vehicles
Where there is an indicator of impairment, the recoverable amount of the individual asset is estimated. When the residual values are reassessed annually, the carrying amount is compared to the resale value of the specific vehicle taking into consideration its age and condition.
Gains and losses
The gains or losses arising from de-recognition or disposal of an item of property, plant and equipment is included in surplus and deficit when the item is derecognised. The gains and losses arising from de-recognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any and the carrying amount of the item.
Leased assets
Leased assets can be separated into the following categories:
• leases for office equipment; and
• leasehold improvements
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that SALGA will obtain ownership by the end of the lease term.
Leasehold improvements arise when SALGA improves the premises occupied under operating leases to suit operational requirements. Capitalised leasehold improvements are depreciated over the shorter of the estimated useful life of the asset and the lease term.
1.6 Intangible assets
An asset is identifiable if it is either:
• separable, i. e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether the entity intends to do so; or
• arises from binding arrangements( including rights from contracts), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
An intangible asset is recognised when:
• it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the entity; and
• the cost or fair value of the asset can be measured reliably.
SALGA assesses the probability of expected future economic benefits or service potential using reasonable and supportable assumptions that represent management’ s best estimate of the set of economic conditions that will exist over the useful life of the asset.
Intangible assets are initially recognised at cost.
Subsequent to initial recognition intangible assets are carried at cost less any accumulated amortisation and any impairment losses.
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