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1.7.3 Derecognition
construction are not depreciated until the asset is
brought into use.
Assets intended for disposal are reclassified as ‘held for
Revaluation Gains and Losses sale’ once all of the following criteria are met:
Revaluation gains are recognised in the revaluation • the asset is available for immediate sale in its present
reserve, except where, and to the extent that, they condition subject only to terms which are usual and
reverse a revaluation decrease that has previously been customary for such sales;
recognised in operating expenses, in which case they
• the sale must be highly probable i.e:
are recognised in operating income.
- management are committed to a plan to sell the
asset
Revaluation losses are charged to the revaluation
- an active programme has begun to find a buyer and
reserve to the extent that there is an available balance
complete the sale
for the asset concerned, and thereafter are charged to
- the asset is being actively marketed at a reasonable
operating expenses.
price
- the sale is expected to be completed within 12
Gains and losses recognised in the revaluation reserve
months of the date of classification as ‘held for sale’
are reported in the Statement of Comprehensive
and
Income as an item of ‘other comprehensive income’.
- the actions needed to complete the plan indicate it
is unlikely that the plan will be dropped or significant
Impairments changes made to it.
In accordance with the GAM, impairments that arise
Following reclassification, the assets are measured at
from a clear consumption of economic benefits or of
service potential in the asset are charged to operating the lower of their existing carrying amount and their
‘fair value less costs to sell’. Depreciation ceases to be
expenses. A compensating transfer is made from the
revaluation reserve to the income and expenditure charged. Assets are de-recognised when all material
sale contract conditions have been met.
reserve of an amount equal to the lower of (i) the
impairment charged to operating expenses; and (ii) the
balance in the revaluation reserve attributable to that Property, plant and equipment which is to be scrapped
or demolished does not qualify for recognition as ‘held
asset before the impairment.
for sale’ and instead is retained as an operational asset
and the asset’s economic life is adjusted. The asset is
An impairment that arises from a clear consumption
de-recognised when scrapping or demolition occurs.
of economic benefit or of service potential is reversed
when, and to the extent that, the circumstances
that gave rise to the loss is reversed. Reversals are 1.7.4 Donated and Grant Funded
recognised in operating expenditure to the extent that Assets
the asset is restored to the carrying amount it would
have had if the impairment had never been recognised. Donated and grant funded property, plant and
Any remaining reversal is recognised in the revaluation equipment assets are capitalised at their fair value on
reserve. Where, at the time of the original impairment, receipt. The donation/grant is credited to income at the
a transfer was made from the revaluation reserve to same time, unless the donor has imposed a condition
the income and expenditure reserve, an amount is that the future economic benefits embodied in the
transferred back to the revaluation reserve when the grant are to be consumed in a manner specified by the
impairment reversal is recognised. donor, in which case, the donation/grant is deferred
within liabilities and is carried forward to future financial
Other impairments are treated as revaluation losses. years to the extent that the condition has not yet been
Reversals of ‘other impairments’ are treated as met.
revaluation gains.
The donated and grant funded assets are subsequently
At each financial year end, the trust checks whether accounted for in the same manner as other items of
there is any indication that its property, plant and property, plant and equipment.
equipment or intangible assets have suffered
an impairment loss. If there is indication of such 1.7.5 Private Finance Initiative (PFI)
impairment, the recoverable amount of the asset is and Local Improvement Finance Trust
estimated to determine whether there has been a loss (LIFT) Transactions
and if so, its amount.
PFI and LIFT transactions which meet the IFRIC 12
definition of a service concession, as interpreted in HM
Treasury’s FReM, are accounted for as ‘on-Statement
Alder Hey Children’s NHS Foundation Trust 165 Annual Report & Accounts 2017/18
