b'CHP financial statements 2020/2021Notes to the financial statements 12Property, plant and equipmentFreehold land is not depreciated. Assets duringNon-financial assets (property, plant and equipment)Value in use for assets held for their service potential construction are not depreciated until they are completerepresents the depreciated replacement cost, being Housing propertiesand ready for use. Depreciation is charged on majorThe Groups housing properties and other property, plantthe most economic cost required to replace the service Housing properties are properties held for the provision ofcomponents to write off the cost of the components toand equipment are assessed for impairment at eachpotential of the asset. social housing or to otherwise provide social benefit andtheir residual value, over their estimated useful lives, usingreporting date. Where indicators are identified, then an are principally properties available for rent and the straight-line method.assessment is undertaken to compare the carrying amountDepreciated replacement cost is the lower of the cost of shared ownership.The components identified, with their respective usefulof assets or cash-generating units for which impairment isconstructing or acquiring a replacement asset to provide indicated to their recoverable amounts. If there is objectivethe same level of service potential. The cost of acquiring On transition to the new Financial Reporting Standardslives, are as follows:evidence of impairment, an impairment loss is recogniseda replacement asset could be either through purchasing (FRS 102), we took the option of using the previous GAAPimmediately in the statement of comprehensive income.an equivalent property on the open market or purchasing revaluation of completed housing properties as at 31an equivalent property from another registered provider, March 2014 as their deemed cost at the revaluation date,Component Estimated useful lifeA cash generating unit is the smallest identifiable groupproviding there is an active market. being 31 March 2014.of assets that generates cash inflows that are largely Structure 100 independent of the cash inflows from other assets or Housing properties constructed or acquired since thegroups of assets. date of transition to FRS 102 are stated at cost lessKitchen 25depreciation and impairment (where applicable). The costAn asset is impaired where there is objective evidence of housing land and property represents their purchaseBathroom 35 that, because of one or more events that occurred after price and any directly attributable costs of acquisition andinitial recognition, the estimated recoverable value of the construction, which may include an appropriate amountHeating system: boiler 7-15 asset has been reduced. for staff costs and interest, up to the date of completion.The recoverable amount of an asset is the higher of its The cost of land for mixed developments is split betweenHeating system: remainder 40 fair value less costs to sell and its value in use. Value in tenures based upon the respective site values. Expenditureuse represents the present value of the future cash flows on items not separately identified as components areWindows and doors 30 expected to be derived from an asset or cash-generating capitalised if they result in incremental future benefit, forunit, appropriately adjusted to account for any restrictions example an increase in the net rental stream over the lifeRoofs 70 on their use. The assessment of value in use may involve of the property. The carrying amount of the part of theconsiderations of the service potential of the assets or asset replaced is derecognised.cash-generating units, provided the property concerned is Shared ownership properties are split proportionallyRefurbishment or replacement of such components isbeing used for social housing and is in demand. between current and fixed assets based on the elementcapitalised and depreciated over the estimated useful life relating to expected first tranche sales. The first trancheof the component. The carrying amount of any replaced proportion is classed as a current asset until disposal andcomponent or part component is derecognised. related sales proceeds included in turnover.Gains and losses on disposal are determined by comparing The remaining element is classed as a fixed asset andthe proceeds with the carrying amount and are recognised included in housing properties at cost once completed, lesswithin the statement of comprehensive income. any provisions needed for depreciation or impairment. Prior to completion, the properties are carried under assets under construction. Subsequent sales are treated as sales of fixed assets. The exception to the above is where this would result in a surplus on the disposal of the current asset that would exceed the anticipated overall surplus. In these circumstances any surplus on disposal of the first tranche is limited to the overall surplus by adjusting the costs allocated to current or fixed assets. The overall surplus is the difference between the net present value of cash flows and the cost. The net present value of the cash flows is the sum of the first tranche proceeds, net rental streams and expected receipts from subsequent disposals of the asset, less any grant repayable. 64 65'