The Learning and Skills Councils Annual Report and Accounts for ...

Table 1: Summary of depreciation methods
Property, Plant
and Equipment
Intangible
Fixed Assets
Category
Component
(if applicable)
Method
Useful life
IT Desktop IT Straight line 3 years
Other IT Straight line 5 years
Plant and machinery Straight line 3 years
Furniture and
fittings
Furniture Straight line 5 years
Fitting out Straight line Less than 10 years or the duration of the
building lease
Internally developed systems Straight line 5 years
Software licences Straight line Life of the licence or 3 years where none given
For Property, Plant and Equipment the
residual values, depreciation methods
and useful life assumptions described
in Table 1 shall be reviewed at least
annually by each financial year-end.
For Intangible Assets, amortisation
periods and methods described in
Table 1 shall be reviewed at least
annually by each financial year-end.
Any changes arising from these reviews
will be accounted for as changes to
accounting estimates.
1.6 Revaluation
For all classes of assets, revaluation
shall be undertaken with sufficient
regularity to ensure that carrying
values do not differ materially from
fair values. There was no revaluation in
2009–10.
1.7 Impairment
Property, Plant and Equipment and
Intangible Assets are subject to
impairment reviews to ensure that
they are carried at no more than the
recoverable amount: the higher of net
selling price or value in use. For each
financial reporting period, the LSC will
assess whether there are any internal
or external indications of impairment
in its assets and will estimate the
recoverable amounts of any such
assets affected.
1.8 Subsequent measurement
Where material, any surplus arising
from indexation is recognised directly
in a revaluation reserve within equity,
except to the extent that the surplus
reverses a previous revaluation
deficit on the same asset recognised
in the Net Expenditure Account, in
which case the credit is to the Net
Expenditure Account.
1.9 Subsequent measurement –
IT systems
The LSC’s software systems have been
designed and built specifically for LSC
use. They are not income generating
and there was no active market for
them. As there are no appropriate
indices to apply to these assets, the
LSC therefore considers depreciated
historical cost to be the most suitable
model of depreciated replacement cost
(as a proxy for fair value).
1.10 Leases
Operating leases and the rentals
are charged to the Net Expenditure
Account on a straight-line basis over
the lease term.
1.11 Receivables: programme
expenditure
Programme receivables derive from
various programmes. They mostly
reflect part of the normal operation
of the reconciliation process of the
respective programme to ensure that
only amounts earned on the basis of
actual delivery are paid to providers
and recorded in the LSC’s accounts.
In the vast majority of cases, these
amounts are offset against future
payments to providers and recovered
(usually in following month).
The LSC also has receivables that are
the result of assurance work. This work
may determine either:
• an actual amount that needs to be
recovered from a provider, or
• a data error that is extrapolated
across the data population to
determine an amount to be
recovered from a provider.
These amounts are only included in
the LSC’s accounts when a reliable
value for the recovery has been
established. In most cases, the
amounts are recovered through
in-year data adjustments that result in
reduced future payments to providers.
50 LSC Annual Report and Accounts 2009–10