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1.6 Expenditure on Other Goods and that would be determined at the end of the reporting
Services period. Current values in existing use are determined as
follows:
Expenditure on goods and services is recognised
• Land and non-specialised buildings – market value
when, and to the extent that they have been received,
for existing use
and is measured at the fair value of those goods and
services. Expenditure is recognised in operating • Specialised buildings – depreciated replacement
expenses except where it results in the creation of cost, modern equivalent asset basis.
a non-current asset such as property, plant and
equipment. The Depreciated Replacement Cost approach assumes
that the asset would be replaced with a modern
1.7 Property, Plant and Equipment equivalent, not a building of identical design, with
the same service potential as the existing asset. The
1.7.1 Recognition modern equivalent may well be smaller than the existing
asset, for example, due to technological advances in
plant and machinery.
Property, plant and equipment is capitalised where:
• it is held for use in delivering services or for Properties in the course of construction for service or
administrative purposes administration purposes are carried at cost, less any
impairment loss. Cost includes professional fees and,
• it is probable that future economic benefits will flow
where capitalised in accordance with IAS23, borrowing
to, or service potential be provided to, the trust
costs. Depreciation commences when they are brought
• it is expected to be used for more than one financial into use.
year
• the cost of the item can be measured reliably IT equipment, furniture and fittings and plant and
machinery that are held for operational use are valued
• the item has cost of at least £5,000, or
at depreciated historic cost where these assets have
• collectively, a number of items have a cost of at least short useful economic lives or low values or both, as
£5,000 and individually have cost of more than £250, this is not considered to be materially different from
where the assets are functionally interdependent, had current value in existing use.
broadly simultaneous purchase dates, are anticipated
to have similar disposal dates and are under single Subsequent Expenditure
managerial control, or
Subsequent expenditure relating to an item of property,
• items form part of the initial equipping and setting-up plant and equipment is recognised as an increase in
cost of a new building or refurbishment of a ward or the carrying amount of the asset when it is probable
unit, irrespective of their individual or collective cost. that additional future economic benefits or service
These are capitalised as a grouped equipment asset. potential deriving from the cost incurred to replace
a component of such item will flow to the enterprise
Where a large asset, for example a building, includes a and the cost of the item can be determined reliably.
number of components with significantly different asset Where a component of an asset is replaced, the cost
lives, e.g. plant and equipment, then these components of the replacement is capitalised if it meets the criteria
are treated as separate assets and depreciated over for recognition above. The carrying amount of the part
their own useful economic lives. replaced is de-recognised. Other expenditure that does
1.7.2 Measurement not generate additional future economic benefits or
service potential, such as repairs and maintenance, is
Valuation charged to the Statement of Comprehensive Income in
the period in which it is incurred.
All property, plant and equipment assets are measured
initially at cost, representing the costs directly Depreciation
attributable to acquiring or constructing the asset and Items of property, plant and equipment are depreciated
bringing it to the location and condition necessary for over their remaining useful economic lives in a manner
it to be capable of operating in the manner intended consistent with the consumption of economic or
by management. Assets that are held for their service service delivery benefits. Freehold land is considered to
potential and are in use are measured subsequently at have an infinite life and is not depreciated.
their current value in existing use.
Property, plant and equipment which has been
Revaluations of property, plant and equipment are reclassified as ‘held for sale’ ceases to be depreciated
performed with sufficient regularity to ensure that upon the reclassification. Assets in the course of
carrying amounts are not materially different from those

Alder Hey Children’s NHS Foundation Trust 164 Annual Report & Accounts 2017/18