Capitalisation of interest costs
Interest on borrowings is charged to housing properties under
construction up to the date of completion of each scheme. The
interest charged is either on borrowing specifically for a scheme or
net borrowings, to the extent that they are deemed to be financing
a scheme based on the weighted average cost of capital. This
treatment applies irrespective of the original purpose for which the
loan was raised. Other interest payable is charged to income and
expenditure in the year.
Intangible fixed assets and goodwill
All business combinations are accounted for by applying the
acquisition method. Goodwill represents the excess of the
fair value of the consideration over the fair value of the assets,
liabilities and contingent liabilities acquired on acquisition of
subsidiaries. Identifiable intangibles are those which can be sold
separately or which arise from legal rights regardless of whether
those rights are separable.
Goodwill is stated at cost less accumulated amortisation
and impairment losses. The estimated useful life of goodwill is
20 years.
Other intangible assets that are acquired by the Group are stated
at cost less accumulated amortisation and impairment losses.
n Freehold offices 50 years
n Furniture and equipment 6 years
n Computer equipment 4 - 6 years
n Leasehold improvements 6 years
Gains or losses arising on the disposal of other tangible fixed
assets are determined as the difference between the disposal
proceeds and the carrying amount of the assets and are
recognised as part of the surplus/deficit for the year. Where
there is evidence of impairment, fixed assets are written down to
recoverable amount, with the impairment being charged to the
Operating Surplus.
Stock and work in progress
Stock and work in progress is measured at the lower of cost and
estimated selling price less costs to complete and sell.
Debtors
Short term debtors are measured at the transaction price, less any
impairment. Where deferral of payment terms have been agreed at
below market rate, and where material, the balance is shown at the
present value, discounted at a market rate.
Creditors
Amortisation is charged to the consolidated statements of
comprehensive income on a straight-line basis over the estimated
useful lives of intangible assets. Other intangible assets are
amortised from the date they are available for use. The estimated
useful lives are as follows:
Short term creditors are measured at the transaction price. Other
financial liabilities, including bank loans, are measured initially at
fair value, net of transaction costs, and are measured subsequently
at amortised cost using the effective interest method.
Customer contracts: 20 years.
Government grants
Donated land
Government grants include grants receivable from the Homes
and Communities Agency (the HCA), local authorities, and other
government organisations. Government grants received for
housing properties are recognised in income over the useful life of
the housing property structure under the accruals model.
Land donated by local authorities and others is added to cost
at the fair value of the land at the time of the donation. Where
the land is not related to specific development and is donated
by a public body an amount equivalent to the increase in value
between fair value and consideration treated as non-monetary
government grant and recognised on the statement of financial
position as deferred income within liabilities. Where the donation is
from a non-public source, the value of the donation is included as
income.
Other fixed assets and depreciation
Other tangible fixed assets are measured at cost less accumulated
depreciation and any accumulated impairment losses.
Depreciation is charged on a straight-line basis over the expected
useful economic lives of fixed assets to write off the cost less
estimated residual value. The estimated useful economic life for
each component is as follows:
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Accord Group
Grants relating to revenue are recognised in income and
expenditure over the same period as the expenditure to which
they relate once reasonable assurance has been gained that the
association will comply with the conditions and that the funds will
be received.
Government grants released on the sale of a property may be
repayable but are normally available to be recycled and are
credited to a Recycled Capital Grant Fund and included in the
statement of financial position in creditors.
If there is no requirement to recycle or repay the grant on disposal
of the asset, any unamortised grant remaining within creditors is
released and recognised as income in income and expenditure.