Item 8 - Sheffield Health and Social Care

Revaluation gains and lossesIncreases in asset values arising from revaluationgains are recognised in the revaluation reserve,except where, and to the extent that, they reversea revaluation decrease that has previously beenrecognised in operating expenses, in which casethey are recognised in operating income.Revaluation losses are charged to the revaluationreserve to the extent that there is an availablebalance for the asset concerned, and thereafterare charged to operating expenses.Gains and losses recognised in the revaluationreserve are reported in the Statement ofComprehensive Income.ImpairmentsIn accordance with the FT Annual Reporting Manual,impairments that are due to a loss of economicbenefits or service potential in the assets are chargedto operating expenses. A compensating transfer ismade from the revaluation reserve to the income andexpenditure reserve of an amount equal to the lowerof (i) the impairment charged to operating expenses;and (ii) the balance in the revaluation reserveattributable to that asset before the impairment.As the Trust has no current or prior year impairmentsof this type, no adjustment is required.An impairment arising from a loss of economicbenefit or service potential is reversed when andto the extent that, the circumstances that gave riseto the loss is reversed. Reversals are recognisedin operating income to the extent that the assetis restored to the carrying amount it would havehad if the impairment had never been recognised.Any remaining reversal is recognised in therevaluation reserve. Where, at the time of theoriginal impairment, a transfer was made from therevaluation reserve to the income and expenditurereserve, an amount is transferred back to revaluationreserve when the impairment reversal is recognised.Other impairments are treated as revaluation losses.Reversals of ‘other impairments’ are treated asrevaluation gains.De-recognitionAssets intended for disposal are reclassified as ‘Heldfor Sale’ once all of the following criteria are met:The asset is available for immediate sale in itspresent condition subject only to terms which areusual and customary for such sales;The sale must be highly probable i.e:• management are committed to a plan tosell the asset;• an active programme has begun to find a buyerand complete the sale;• the asset is being actively marketed at areasonable price;• the sale is expected to be completed within12 months of the date of classification as‘Held for Sale’; and• the actions needed to complete the plan indicateit is unlikely that the plan will be dropped orsignificant changes made to it.Following reclassification, the assets are measured atthe lower of their existing carrying amount and their‘fair value less costs to sell’. Depreciation ceases to becharged. Assets are de-recognised when all materialsale contract conditions have been met.Property, plant and equipment which is to bescrapped or demolished does not qualify forrecognition as ‘Held for Sale’ and instead is retainedas an operational asset and the asset’s economiclife is adjusted. The asset is de-recognised whenscrapping or demolition occurs.Donated, government grant and other grantfunded assetsDonated and grant funded property, plant andequipment assets are capitalised at their fair valueon receipt. The donation/grant is credited to incomeat the same time, unless the donor has imposeda condition that the future economic benefitsembodied in the grant are to be consumed in amanner specified by the donor, in which case, thedonation/grant is deferred within liabilities and iscarried forward to future financial years to the extentthat the condition has not yet been met. The donatedand grant funded assets are subsequently accountedfor in the same manner as other items of property,plant and equipment.1.5 Intangible assetsRecognitionIntangible assets are non-monetary assets withoutphysical substance which are capable of being soldseparately from the rest of the Trust’s business orwhich arise from contractual or other legal rights.They are recognised only where it is probable thatfuture economic benefits will flow to, or servicepotential be provided to, the Trust and where thecost of the asset can be measured reliably.Internally generated intangible assetsInternally generated goodwill, brands, mastheads,publishing titles, customer lists and similar items arenot capitalised as intangible assets.Expenditure on research is not capitalised.Expenditure on development is capitalisedonly where all of the following can bedemonstrated:• the project is technically feasible to the point ofcompletion and will result in an intangible assetfor sale or use;• the Trust intends to complete the asset andsell or use it;• the Trust has the ability to sell or use theasset;• how the intangible asset will generate probablefuture economic or service delivery benefitse.g. the presence of a market for it or itsoutput, or where it is to be used for internaluse, the usefulness of the asset;• adequate financial, technical and otherresources are available to the Trust to completethe development and sell or use the asset;and• the Trust can measure reliably theexpenses attributable to the asset duringdevelopment.SoftwareSoftware which is integral to the operation ofhardware e.g. an operating system, is capitalisedas part of the relevant item of property, plant andequipment. Software which is not integral to theoperation of hardware e.g. application software,is capitalised as an intangible asset.MeasurementIntangible assets are recognised initially at cost,comprising all directly attributable costs neededto create, produce and prepare the asset to thepoint that it is capable of operating in the mannerintended by management.Subsequently intangible assets are measured at fairvalue. Revaluation gains and losses and impairmentsare treated in the same manner as for property,plant and equipment.Intangible assets held for sale are measured at thelower of their carrying amount or ‘fair value lesscosts to sell’.AmortisationIntangible assets are amortised over their expecteduseful economic lives in a manner consistent with theconsumption of economic or service delivery benefits.1.6 Investment propertyInvestment property comprises properties thatare held to earn rentals or for capital appreciationor both. It is not depreciated but is stated at fairvalue based on regular valuations performed byprofessionally qualified valuers. Fair value is basedon current prices for similar properties in the samelocation and condition. Any gain or loss arisingfrom the change in fair value is recognised in theStatement of Comprehensive Income. Rental incomefrom investment property is recognised on a straightline basis over the term of the lease.1.7 Government and other grantsGovernment grants are grants from Governmentbodies other than income from primary care trustsor NHS trusts for the provision of services. Where aGovernment grant is used to fund expenditure it istaken to the Statement of Comprehensive Incometo match that expenditure.During 2012/13 no government grants or othergrants were received.1.8 InventoriesInventories are valued at the lower of cost and netrealisable value. The cost of inventories is measuredusing the First in First Out (FIFO) method.161162