IAS 16 Property, Plant and Equipment

Further details of the movements in the loan valuation can be found in note 9, while disclosures relating to risk, required by IFRS 7, can be found in note 10. The particular accounting policies adopted by the portfolios of the Scottish Government are described below. They have been applied consistently in dealing with items considered material in relation to the accounts.

The model is long-term in nature and depends on a complex set of assumptions, particularly, the latest Office of Budget Responsibility long-term and medium-term forecasts for RPI, Bank of England base rate and earnings growth. The valuation of the student loan books is uncertain as they are highly dependent on macroeconomic circumstances and graduate earnings over the next 30 years, as well as a number of other complex assumptions. The Open Market Shared Equity and New Supply Shared Equity schemes are available across Scotland. They are open to first-time buyers in particular priority access groups.

In certain situations, a company may record an internally-generated intangible asset but in most cases, it doesn’t assets such as reputation, management skill, etc., but these are valuable, and at least in theory, a company’s stock price reflects their value. It occurs when an asset’s carrying amount exceeds its recoverable value. Under IFRS, the recoverable amount is the higher https://cryptolisting.org/ of fair value less cost to sell and value in use. Value is use is the present value of future cash flows that are expected to be generated using the asset. Property, plant, and equipment represent tangible assets used by a company in its operations over a period longer than one year. They are accounted for using the cost model, but IFRSs also allow the revaluation model.

  • David MacBrayne Limited is now the holding company for the ferry operating companies CalMac Ferries Limited and Argyll Ferries Limited.
  • The revaluation surplus, including changes during the period and any restrictions on the distribution of the balance to shareholders.
  • Larkfield Unit – The Day Hospital Elderly Care Facility contract commenced with Quayle Munro Ltd on 1 November 2000 for a period of 25 years.
  • For income categorised as being applied with limit, any excess income over that approved is surrendered to the Scottish Consolidated Fund.

While these cannot be capitalised in the subsidiary’s individual financial statements, they must be recognised in the consolidated statement of financial position. This will result in an increase in the value of intangible assets with a corresponding decrease in goodwill. Present and past employees are covered by the provisions of the Principal Civil Service Pension Scheme which is a defined benefit scheme and is unfunded.

Tain Health Centre – Service Concession agreement with HUB North of Scotland Ltd for occupancy of the Tain Health Centre effective 24th May 2014. Under the terms of the agreement NHS Highland have a legal commitment to occupy the buildings for a period of 25 years and will dcip coin price incur annual charges for occupancy, maintenance and running costs. Stobhill Hospital – The Ambulatory Care and Diagnostic Treatment Centre 60 bed extension. PFI contract commenced with Glasgow Healthcare Facilities Ltd on 25 February 2011 for a period of 30 years.

The types of financial interest that must be registered are those that might affect any actions, speeches or votes in the Parliament. This register is available for public inspection at the office of the Standards clerks with a further copy available at the main visitor information desk at the Scottish Parliament building. Information is provided in the performance report in the beginning of these accounts of the register of interests members of the Corporate Board. The Scottish Government is also the sponsor of cross-border public authorities which are listed in The Scotland Act 1998 (Cross-Border Public Authorities) Order 1999. These bodies are regarded as related parties with which the Scottish Government has had material transactions during the year. EU CAP audits can result in future disallowances and a number of audits are in progress relating to CAP for scheme years 2015, 2016, 2017, 2018 and 2019.

Amendments under consideration by the IASB

These costs will be subject to negotiation and the monetary impact is not reliably estimable. Court Custody and Prisoner Escort Service – This service concession arrangement covers a service let for 8 years with an option to extend for a further 2 years. Aberdeen Western Peripheral Road/Balmedie and Tipperty – The project involves the construction of a new dual carriageway around the City of Aberdeen and upgrades the road between Balmedie and Tipperty to dual carriageway. The NPD contract also incorporates the management, operation and maintenance of these roads for the next 30 years.

These can be reported either in the statement of financial position or in the notes to financial statements. Here is a snapshot from the 2017 annual report of the Coca-Cola Company. Easter Ross – This scheme is a redevelopment of County Hospital, Invergordon into a Primary Care Centre and combines a community hospital and a health centre, integrating primary and community care into one community health resource. The estimated capital value at the commencement of the contract was £9m and the PFI property will revert to the board at the end of the contract. As directed by the FReM, IAS 17 Leases and SIC15 Operating Leases apply.

Intangible assets are identifiable non-monetary assets without physical substance. There are many factors to consider when effectively deciding on what premium to pay for an asset. This is part of the reason that Mergers and Acquisitions is such a specialist subject sector of the financial services market. As a company acquires subsidiaries or other entities, the group will need to take financial consolidation into account. Consolidated accounting is when the parent company combines the financial data from multiple entities to produce consolidated financial statements and/or management reports. These are essential to give business leaders a comprehensive overview of their group operations, its strengths and weaknesses.

Assets classified as under construction are recognised in the statement of financial position to the extent that money has been paid or a liability has been incurred. All PPE assets will be accounted for as non-current assets unless they are deemed to be held-for-sale (see note 1.3 below), and will be accounted for under IAS 16 Property, Plant and Equipment. IFRS labels items of PPE which are held to earn rental income or capital appreciation as an investment property and allows companies to account for it using either the cost model or the fair value model.

carrying amount vs fair value

Nash purchased a building for its own use on 1 January 20X1 for $1m and attributed it a 50 year useful life. There are many indicators of impairment including loss of customers or key personnel or material changes in technology or market conditions. If an entity decides that the goodwill is impaired, it must be written down to its recoverable amount. These elements may be intangible and difficult to measure in financial terms, but they are critical success factors that can make a business more profitable, sustainable, attractive and valuable. Entities with property, plant and equipment stated at revalued amounts are also required to make disclosures under IFRS 13 Fair Value Measurement.

The estimates underpinning these adjustments are based on a model which holds data on the demographic and behavioural characteristics of students in order to predict their borrowing behaviour and estimate the likely repayments of student loans. Given the long term nature of both adjustments, the time value of money is significant, and they are discounted using the current HM Treasury discount rate. Cash and cash equivalents, trade receivables, short term loans, accrued income relating to EU funding, amounts receivable and shares will be classified as amortised cost.

Scottish Government consolidated accounts: annual report 2019 to 2020

Under the terms of the agreement NHS Grampian have a legal commitment to occupy the buildings for a period of 25 years and will incur annual charges for occupancy, maintenance and running costs. Aberdeen Health and Community Care Village – Service Concession agreement with HUB North of Scotland Ltd for occupancy of the Aberdeen Health and Community Care Village effective 14th November 2013. Ayrshire and Arran Ayrshire Maternity Unit – adjoined to University Crosshouse Hospital in Kilmarnock, the facility provides Area Midwifery services for in-patients, day patients, and out-patients. The 30 year contract commenced in July 2006 and will be completed in July 2036.

carrying amount vs fair value

A constructive obligation was deemed to be established in respect of support grants to be paid to eligible businesses to ameliorate the adverse economic consequences of the COVID-19 pandemic. In order to put the necessary administrative structures in place, Scottish Ministers announced plans for the support in March 2020 with schemes, administered by Local Authorities, scheduled to commence from 1 April 2020. On 30 March, the Scottish Government issued guidance to Local Authorities on the eligibility for support, to support the consideration by Local Authorities of applications from businesses. The Scottish Parliament makes provision for the use of resources by the Scottish Government, for revenue and capital purposes, in a Budget Act for each financial year.

Reversal of an impairment loss

During this time, the assets are not used for the operation of the business and are not generating any revenue. This recognition principle is applied to all property, plant, and equipment costs at the time they are incurred. These 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.

carrying amount vs fair value

Where necessary obligations in respect of grant schemes are recognised as liabilities. Revenue is recognised when the amount can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met. In accordance with the FReM, Intangible assets are accounted for in line with the requirements of IAS 38 Intangible Assets, and are valued at depreciated replacement cost. Revaluations are carried out according to IAS 38 for assets over a valuation threshold. Communications are valued using agreed rates determined to identify the replacement cost of applicable types of communication.

IAS 16 — Property, Plant and Equipment

Only contingent liabilities above the threshold of £1m, which have to be reported and authorised by the Scottish Parliament in accordance with the written agreement between the Finance Committee and the Scottish Government, are included in the consolidated annual accounts. HMP Kilmarnock – The contract covers the design, construction, financing and operation of a prison HMP Kilmarnock. The capital liability is now nil, however, payments for the service element continue to the end of the contract. Balfour Hospital -The facility is a general hospital and healthcare facility in Kirkwall, Orkney, comprising 48 beds and bringing together primary care, emergency and elective diagnostic, outpatient, day case and inpatient services. This is a Non Profit Distribution scheme with a funding variant over 25 years. Allermuir Health Centre – An integrated primary care facility, combining General Practice and NHS community health services in the Firhill area of Edinburgh.

Fair value through profit and loss (FVTPL) and held for trading

OMSE is for purchases off the open market, whilst NSSE is for purchases from local councils and housing associations. They help first time buyers to purchase a property without having to fund its entire cost. Buyers will pay for the biggest share which is usually between 60% and 90% of the home’s cost. The Scottish Government holds the remaining share under a shared equity agreement. In addition to the land and buildings recorded in the core portfolios’ accounts, the consolidated accounts reflect some land and buildings which are specialised operational properties and have been valued at their depreciated replacement cost. As noted in the relevant underlying agency accounts, the open market value of these properties would be significantly lower.

Accounting goodwill vs economic goodwill

Assets classified as held for sale are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. Assets classified as held for sale are not subject to depreciation or amortisation. Under IFRS, unrealized gains and losses are reflected in fair value through profit and loss if they are neither accounted for under amortized cost nor FVOCI. Further, IFRS allows companies to designate some assets as FVTPL irrevocably.

The fair value estimation technique for the loans relates to the underlying property valuations using the Nationwide Pricing Index method, where applicable. Scottish Water National Loans Fund repayments of £27m have not been included in the Environment, Climate Change and Land Reform portfolio capital outturn. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Grants payable or paid are recorded as expenditure in the period that the underlying event or activity giving entitlement to the grant occurs.

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations was originally issued in March 2004, effective from 1 January 2005. All effective amendments issued since that date are reflected in the text of the standard. Detailed editorial notes set out the history of major amendments, and prospective amendments not yet effective. Under the fair value method, the value of the non-controlling interest at acquisition will be higher, meaning that the goodwill figure is higher.

Leases other than finance leases are treated as operating leases, and rentals payable in respect of operating leases will be charged to the outturn statement on a straight line basis over the term of the lease. Losses in value reflected in valuations are accounted for in accordance with IAS 36, Impairment of Assets as adapted by the FReM which states that impairment losses that arise from a clear consumption of economic benefit should be taken to the outturn statement. The balance on any revaluation reserve to which the impairment would have been charged under IAS 36 should be transferred to the general fund. IAS 36 Impairment of Assets seeks to ensure that an entity’s assets are not carried at more than their recoverable amount (i.e. the higher of fair value less costs of disposal and value in use). Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the outturn statement.


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