Board paper cover sheet - NHS Ayrshire and Arran.

NHS Board Meeting23 June 2010 Paper 5• an active programme has begun to find a buyer and complete thesale;• the asset is being actively marketed at a reasonable price;• the sale is expected to be completed within 12 months of the date ofclassification as ‘Held for Sale’; andthe actions needed to complete the plan indicate it is unlikely that the plan will bedropped or significant changes made to it.Following reclassification, the assets are measured at the lower of their existingcarrying amount and their ‘fair value less costs to sell’. Depreciation ceases to becharged and the assets are not revalued, except where the ‘fair value less costs tosell’ falls below the carrying amount. Assets are de-recognised when all material salecontract conditions have been met.Property, plant and equipment which is to be scrapped or demolished does notqualify for recognition as ‘Held for Sale’ and instead is retained as an operationalasset and the asset’s economic life is adjusted. The asset is de-recognised whenscrapping or demolition occurs.9. Donated AssetsNon-current assets that are donated or purchased using donated funds are includedin the Balance Sheet initially at the current full replacement cost of the asset. Thevalue of donated assets is credited to the Donated Asset Reserve. Where a donationcovers only part of the total cost of the asset concerned, only that part element isincluded in the Donated Asset Reserve.The accounting treatment, including the method of valuation, follows the rules in theNHS Capital Accounting Manual. Gains and losses on revaluations are also taken tothe donated asset reserve and, each year, an amount equal to the depreciationcharge on the asset is released from the donated asset reserve to the operating coststatement. Similarly, any impairment on donated assets charged to the operatingcost statement is matched by a transfer from the donated asset reserve. On sale ofdonated assets, the net book value of the donated asset is transferred from thedonated asset reserve to the General Fund.10. Sale of Property, plant and equipment, intangible assets and non-currentassets held for saleDisposal of non-current assets is accounted for as a reduction to the value of assetsequal to the net book value of the assets disposed. When set against any salesproceeds, the resulting gain or loss on disposal will be recorded in the OperatingCost Statement. Non-current assets held for sale will include assets transferred fromother categories and will reflect any resultant changes in valuation.11. LeasingFinance leasesWhere substantially all risks and rewards of ownership of a leased asset are borneby the Board, the asset is recorded as Property, Plant and Equipment and acorresponding liability is recorded. The value at which both are recognised is thelower of the fair value of the asset or the present value of the minimum leasepayments, discounted using the interest rate implicit in the lease. The implicit interestrate is that which produces a constant periodic rate of interest on the outstandingPage 50 of 136