ANNUAL REPORT 2005/2006 - Railway Safety Regulator

1.2.2 Grants received from Government related to assets are recorded as deferred incomewhen received and are then recognised to income when expenses are incurred for itsintended purposes on a systematic basis over the estimated economic lives of the assetsto which they relate.1.2.3 Other Grants received are recorded as income in the period in which they becomereceivable as there are no future related expenses which can be used as basis forallocating the grants.1.3 Property, plant and equipmentAll property, plant and equipment are initially recorded at cost.Assets are written off on the straight line method to their residual values over theirestimated useful lives at the following rates per annum:Computer Equipment 33%Furniture & Equipment 0%Office Equipment 20%Leasehold improvement is written off on straight line method over the lease period.The following is an exception to the above:Assets costing R 5,000 or less, are written off in the year of acquisition except where theyare considered to be depreciable.1.4 Asset impairmentAt each balance sheet date, the entity reviews the carrying amounts of its assets todetermine whether there is any indication that those assets may be impaired. If any suchindication exists, the recoverable amount of the asset is estimated in order to determine theextent of the impairment loss.If the recoverable amount of an asset is estimated to be less than its carrying amount, thecarrying amount of the asset is reduced to its recoverable amount. Impairment losses areimmediately recognised as an expense.Where an impairment loss subsequently reverses, the carrying amount of the asset isincreased to the revised estimate of its recoverable amount to the extent that the increasedcarrying amount does exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset in prior years. A reversal of an impairmentloss is recognised as income immediately.1.5 Financial Instruments1.5.1 RecognitionFinancial assets and financial liabilities are recognised on the entity’s balance sheet whenthe entity becomes a party to the contractual provisions of the instrument.1.5.2 MeasurementFinancial instruments are initially measured at cost, which includes transaction costs.Subsequent to initial recognition, these instruments are measured as set out below.1.5.3 Financial assetsThe entity’s principle financial assets are accounts receivable and cash and cashequivalents.Trade receivablesTrade receivables are stated at their nominal value as reduced by appropriate allowancesor estimated irrecoverable amounts.1.5.4 Financial liabilitiesThe entity’s principle financial liabilities are accounts payable.All financial liabilities are measured at amortised cost, comprising original debt lessprinciple payments and amortisations.Trade payablesTrade and other payables are stated at their nominal value.Annual Report - 41