Entire Document - Chris Hani District Municipality

the municipality is satisfied that impairment of Financial Assets recorded during theyear is appropriate.1.2 Critical Judgements, Estimations and Assumptions (continued)1.2.3 Impairment of Financial Assets (continued)♦1.2.4Impairment of Trade Receivables:The calculation in respect of the impairment of Debtors is based on anassessment of the extent to which Debtors have defaulted on paymentsalready due, and an assessment of their ability to make payments based ontheir creditworthiness. This is performed per service-identifiable categoriesacross all classes of debtors.Useful lives of Property, Plant and Equipment, Investment Property andIntangible AssetsChapter 4As described in Accounting Policies 3.3 and 4.2 the municipality depreciates /amortises its Property, Plant and Equipment, Investment Property and IntangibleAssets over the estimated useful lives of the assets, taking into account the residualvalues of the assets at the end of their useful lives, which is determined when theassets are available for use.The useful lives of assets are based on management’s estimation. Managementconsidered the impact of technology, availability of capital funding, servicerequirements and required return on assets in order to determine the optimum usefullife expectation, where appropriate.The estimation of residual values of assets is based on management’s judgement asto whether the assets will be sold or used to the end of their useful lives, and in whatcondition they will be at that time.1.2.5Impairment: Write-down of Property, Plant and Equipment andInventoriesAccounting Policy 5 on Impairment of Assets and Accounting Policy 7.2 on Inventory –Subsequent Measurement describe the conditions under which non-financial assetsare tested for potential impairment losses by the management of the municipality.Significant estimates and judgements are made relating to impairment testing ofPPE, impairment testing of Intangible Assets and write-down of Inventories to thelowest of Cost and Net Realisable Values (NRV).239