Entire Document - Chris Hani District Municipality

Compensation from third parties for items of property, plant and equipment that were impaired, lost or given up is
included in surplus or deficit when the compensation becomes receivable.
2.3 Depreciation
Depreciation on assets other than land is calculated on cost, using the straight-line method, to allocate their cost or
revalued amounts to their residual values over the estimated useful lives of the assets. The depreciation method used
reflects the pattern in which the asset’s future economic benefits or service potential are expected to be consumed
by the municipality. Components of assets that are significant in relation to the whole asset and that have different
useful lives are depreciated separately.
Depreciation only commences when the asset is available for use, unless stated otherwise.
The depreciation rates are based on the following estimated useful lives:
Asset Class Years Asset Class Years
Infrastructure
Other
Roads and Paving 10 - 100 Buildings 25 – 30
Pedestrian Malls 15 - 30 Specialist Vehicles 10 – 15
Electricity 15 - 60 Other Vehicles 5 – 15
Water 15 - 100 Office Equipment 3 – 15
Sewerage 15 - 60 Furniture and Fittings 5 – 15
Housing 30 Watercraft 15 – 20
Bins and Containers 5 – 15
Community
Specialised Plant and
Improvements 25 - 30 Equipment 10 – 15
Recreational Facilities 15 - 30 Other Plant and
Security 15 - 25 Equipment 2 – 15
Residual values, estimated useful lives and depreciation methods were not reviewed in the previous and current
financial years as required by GRAP 17. The municipality applied ASB directive 4 which states that the municipality
need not comply with the measurement requirements of GRAP 17 for the years ending 30 June 2009 and 2010 but
must comply with the measurement requirements for the year ending 30 June 2011. It must however identify and
correctly classify all PPE on an assets register during the 2009 and 2010 years.
2.4 Land
Land is stated at historical cost and is not depreciated as it is regarded as having an infinite life.
2.5 Incomplete Construction Work
Incomplete construction work is stated at historical cost. Depreciation only commences when the asset is available
for use.
2.6 Finance Leases
Assets capitalised under finance leases are depreciated over their expected useful lives on the same basis as PPE
controlled by the municipality or where shorter, the term of the relevant lease if there is no reasonable certainty that
the municipality will obtain ownership by the end of the lease term.
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