HSRC Integrated Annual Report 2018/2019

HSRC INTEGRATED ANNUAL REPORT 2018/19 / 97 The useful lives of the various components of buildings have been assessed to be: Lifts 25 years Telephone system 25 years Fixtures 25 years Buildings 25–100 years Leasehold improvements Amortized over the period of the lease 1.7.1.3 Equipment, Motor Vehicles and Artwork The useful lives of the various categories of equipment have been assessed to be: Office furniture 22 years Motor vehicles 5 years Computer and other equipment 5–22 years Library books and manuscripts 20 years Artwork 25 years Mobile clinics Estimated kilometres 1.7.1.4 Leasehold Assets These assets are depreciated over the period of the rental agreement. Leasehold assets are located in HSRC’s regional offices where improvements are made on leased buildings. Leases are disclosed under lease commitments. 1.7.1.5 Donor Funded Assets All assets bought with donor funds are depreciated over the shorter of the asset’s useful life or project duration. 1.7.2 De-recognition of Assets An item of property, plant and equipment is de-recognised upon disposal, returning projects’ assets to the funder or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of financial performance in the year the asset is derecognised. 1.7.3 Repairs and Maintenance Repairs and maintenance are expensed in the period there are incurred, with such costs only capitalised on an asset if the asset’s capacity or future economic benefits associated with the asset will increase. 1.7.4 Key Estimates and Assumptions Applied by Management on Property, Plant and Equipment 1.7.4.1 Property, Plant and Equipment and Intangible Assets Property, plant and equipment and intangible assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. 1.7.4.2 Revaluation of Property, Plant and Equipment HSRC measures its land and buildings at revalued amounts with changes in fair value being recognised in statement of changes in net assets. The entity engaged independent valuation specialists to determine fair value on 15 January 2018, thereby impacting depreciation for the 2017/18 financial year. The key assumptions used to determine the fair value of the land and buildings are further explained in Note 6.1 and 6.2. 1.8 Intangible Assets 1.8.1 Initial Recognition Intangible assets that meet the recognition criteria are stated in the statement of financial position at amortised cost, being the initial cost price less any accumulated amortisation and impairment losses. An intangible asset is recognised when: • It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and • The cost of the asset can be measured reliably . Intangible assets are initially recognised at cost. Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred. 1.8.2 Subsequent Measurement Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the asset to which it relates. The amortisation is calculated at a rate considered appropriate to reduce the cost of the asset less residual value over the shorter of its estimated useful life or contractual period. Residual values and estimated useful lives are reviewed annually. ACCOUNTING POLICIES for the period ended 31 March 2019 (continued)