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
Notes to the Annual Financial Statements
2017
Figures in Rand
26.
•
2016
Impairment of assets (continued)
The appropriateness of the carrying value of the assets prior the change in use.
In the absence an active market for the same assets due to technological advancements and change
in design, management opted for the cost replacement approach to determine value in use. This was
done through the application of consumer price increase (the CPI) on the affected assets.
SALGA determined the value in use of the assets affected by impairment as follows:
A depreciated replacement cost approach was used, where the replacement cost of an asset is the
cost to replace the asset’s gross service potential. This cost is