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 up
to 20 years at the point of acquisition.
Other intangibles assets that are a cquired by the Association
are stated at cost less accumulated amortisation and
impairment losses.
Amortisation is charged to the Statement 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:
Customer contracts
20 years
The Association reviews its intangible fixed assets and
goodwill for indicators of impairment on an annual basis.
Where such indicators are identified the resulting impairment
is recognised as operating expenditure.
Donated land
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 Housing Association
Freehold offices 50 years
Furniture and equipment 6 years
Computer equipment 4 - 6 years
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.
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
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.
Government grants
Government grants include grants receivable from Homes
England (Formerly the Homes and Communities Agency
(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.
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 the
Statement of Comprehensive Income.