Fixed Assets
Management
Fixed asset process
Purchase/Built
Record in asset register
Depreciate
Scrap
OVERVIEW
Agriculture
Biological assets/agricultural produce
Inventory
Held for sale
Used/sold in 12months
Tangible assets
PPE
Used for more than 12months
Used to produce goods/services
Investment property being constructed
Non - monetary assets
Investment property
Land/buildings not occupied by owner
Held for capital appreciation
Intangible assets
Identifiable asset without substance
Can be seperated/divided from entity &
sold,l icensed, rented or exchanged
Arises from legal or contractual rights
PPE (GRAP 7)
Heritage Assets
Definitions
Recognition
Elements of cost
Measurement after
recognition
Residual value &
useful life
De-recognition
• No need to recognise HA
• If recognise- apply disclosure requirements/may apply measurement requirements
• Carrying amount –cost- acc .depr.- acc. impairment loss
• Class of PPE
• Cost –cash or fair value
• Depreciable amt – cost – residual value
• Impairment loss – carrying amt – recoverable amt
• Residual value – current estimate of asset s value at end of its life less disposal costs
• Future economic benefits
• Cost/fair value can be measured reliably
• Purchase price
• Direct costs (location)
• Initial estimated removal, dismantling & restoration costs
• Cost model
• Revaluation (by class not individual asset) increase in carrying amt credited to revaluation
surplus
• Review at least at each reporting date
• On disposal
• No future economic benefits
Legislative Requirements (IFRS/SA GAAP/GRAP)
IAS 16 (AC123) GRAP 17
Property Plant & Equipment
GRAP 103 Heritage Assets
IAS 17 (AC105) GRAP 13
Leases
IAS 23 (AC114) GRAP 5
Borrowing costs
IAS 36 (AC128) GRAP 21/26
Impairment of Assets
IAS 38 (AC129) GRAP 102
Intangible Assets
IAS 40 (AC135) GRAP 16
Investment Property
IFRIC 1 (AC434) IGRAP 2
Changes to existing
decommissioning, restoration
& similar liabilities
IAS 41 (AC 137) GRAP 101
Agriculture
IFRIC 5 (AC438) IGRAP 4
Rights to interests arising from
decommissioning, restoration
& environmental rehabilation
funds
SIC 32 (AC 432) GRAP 102
Intangible assets
Key Areas of focus
1.Asset componentisation
2.Major inspection costs
3.Useful lives & residual values
4.Impairment
5.Derecognition
6.Decommissioning & restoration
7.Asset tagging
8.Asset verification
9.Asset movements
10.Scrapping of assets
COMPONENTISATION OF ASSETS
WHY? Different components have different lives
Valve
Shell
Lining
Coating
COMPONENTS OF A PIPELINE
Pipeline
Pipeline
Pipeline
Pipeline
-
Asset class
Steel
Steel
Steel
Steel
Pipeline - Steel
Pipeline - Steel
Pipeline - Steel
Pipeline - Steel
Pipeline - Steel
Pipeline - Pre-stressed
concrete
Pipeline - UPVC
Pipeline - GRP
Cross Connections
Carbon Fibre Lining
Pipeline – Steel
Sub class
Shell
Lining - CML
Lining - Epoxy
Lining - HDPE
Lining Bitumen
Coating Bitumen
Coating Bituguard
Coating Sintercoat
Cathodic
Protection
Useful life
75
50
50
50
25
50
75
50
20
30
25
Valves
30
75
30
30
FIXED ASSETS POLICY
Major inspection
cost
If required regularly,
can be capitalised
Derecognition
On disposal of asset
Estimated useful
lives & residual
values
Should be reviewed
at least annually
Decommissioning &
restoration
Are you liable?
Asset scrapping
In line with MFMA,
DOA, legislation
Impairment tests
Test annually
Asset verification &
movement
Ensure existance &
location
RAND WATER CURRENT PROJECTS
Revalue
Asset Tagging
Decommission
Life cycle
• Replacement value of assets
• Uniform asset tagging system
• Reviewing our obligations
• Cradle to grave history on major
assets
AS EMPLOYEES OF STATE OWNED
ENTITIES WE HAVE AN OBLIGATION
TO SAFEGUARD STATE ASSETS
AS Citizens WE HAVE AN
OBLIGATION TO SAFEGUARD OUR
ASSETS