Entire Document - Chris Hani District Municipality

3. PROPERTY, PLANT AND EQUIPMENT (continued)1.7Derecognition of Property, Plant and EquipmentThe carrying amount of an item of Property, Plant and Equipment is derecognised ondisposal, or when no future economic benefits or service potential are expected from its useor disposal.The gain or loss arising from the derecognition of an item of Property, Plant and Equipmentis included in surplus or deficit when the item is derecognised. Gains are not classified asrevenue.Gains or losses are calculated as the difference between the carrying value of assets (costless accumulated depreciation and accumulated impairment losses) and the proceedsfrom disposals are included in the Statement of Financial Performance as a gain or loss ondisposal of Property, Plant and Equipment.Chapter 44.1.1INTANGIBLE ASSETSInitial RecognitionIdentifiable non-monetary assets without physical substance are classified andrecognised as Intangible Assets. The municipality recognises an Intangible Asset inits Statement of Financial Position only when it is probable that the expected futureeconomic benefits or service potential that are attributable to the asset will flow to themunicipality and the cost or fair value of the asset can be measured reliably.Internally generated Intangible Assets are subject to strict recognition criteria beforethey are capitalised. Research expenditure is recognised as an expense as incurred.Costs incurred on development projects (relating to the design and testing of new orimproved products) are recognised as Intangible Assets when the following criteriaare fulfilled:♦♦♦♦♦♦It is technically feasible to complete the Intangible Asset so that it will beavailable for use;Management intends to complete the Intangible Asset and use or sell it;There is an ability to use or sell the Intangible Asset;It can be demonstrated how the Intangible Asset will generate probable futureeconomic benefits;Adequate technical, financial and other resources to complete the developmentand to use or sell the Intangible Asset are available; andThe expenditure attributable to the Intangible Asset during its developmentcan be reliably measured.249