Annual Report and Accounts 2012/13 - Royal Bournemouth Hospital

Financial Accountsanticipated to have simultaneousdisposal dates, and are under singlemanagerial control; orl form part of the initial equipping andsetting-up cost of a new building,refurbishment of a ward or unitirrespective of their individual orcollective cost.Where a large asset, for examplea building, includes a number ofcomponents with significantly differentasset lives e.g. plant and equipment,then these components are treated asseparate assets and depreciated overtheir own useful economic lives.ValuationAll property, plant and equipment assetsare measured initially at cost, representingthe costs directly attributable to acquiringor constructing the asset and bringing itto the location and condition necessaryfor it to be capable of operating in themanner intended by management. Theyare subsequently measured at fair value.Non-current assets are stated at the lowerof replacement cost and recoverableamount. The carrying values of property,plant and equipment are reviewedfor impairment in periods if events orchanges in circumstances indicate thecarrying value may not be recoverable.The costs arising from the financingof the construction of fixed assets arenot capitalised but are charged to theStatement of Comprehensive Income inthe year to which they relate.All land and buildings are revalued usingprofessional valuations in accordancewith IAS 16 every five years. A threeyearly interim valuation is also carried out.Professional valuations are carried out bythe District Valuer of the Valuation OfficeAgency. The valuations are carried outin accordance with the Royal Institute ofChartered Surveyors (RICS) Appraisal andValuation Manual. A full asset valuation(excluding Assets Under Construction/Work In Progress) has been undertakenas at 31 March 2013 and is includedin the closing Statement of FinancialPosition.The valuations are carried out primarilyon the basis of Modern Equivalent forspecialised operational property andExisting Use Value for non-specialisedoperational property. The value of landfor existing use purposes is assessed atExisting Use Value. For non-operationalproperties including surplus land, thevaluations are carried out at Open MarketValue.Assets in the course of construction arevalued at current cost. Larger schemesare valued by the District Valuer oncompletion or when brought into use,and all schemes are valued as part of thethree/ five yearly revaluation.Operational equipment is valued at netcurrent replacement cost.Subsequent expenditureSubsequent expenditure relating to anitem of property, plant and equipment isrecognised as an increase in the carryingamount of the asset when it is probablethat additional future economic benefitsor service potential deriving from thecost incurred to replace a component ofsuch item will flow to the enterprise andthe cost of the item can be determinedreliably.Where a component of an asset isreplaced, the cost of the replacementis capitalised if it meets the criteria forrecognition above. The carrying amountof the part replaced is derecognised.Other expenditure that does not generateadditional future economic benefits orservice potential, such as repairs andmaintenance, is charged to the Statementof Comprehensive Income in the period inwhich it is incurred.DepreciationItems of property, plant and equipmentare depreciated over their remaininguseful economic lives in a mannerconsistent with the consumption ofeconomic or service delivery benefits.Freehold land is considered to have aninfinite life and is not depreciated.Annual Report and Accounts 2012/13 25