Amendments to GRAP 16 and GRAP 17

1. Amendments to GRAP 16 and GRAP 17

2. Disclaimer The views and opinions expressed in this presentation are those of the individual. Official positions of the ASB on accounting matters are determined only after extensive due process and deliberation.

3. Amendments to Investment Property and Property, Plant and Equipment

4. Focus areas affected • Distinction Investment property vs. Property, plant & equipment • Useful lives & residual values • Use of external valuers • Disclosure on WIP • Encouraged disclosures • Repairs & maintenance disclosure

5. Investment property • No amendments to principles – clarify application in GRAP 16 • Asset used in production / supply (e.g. social housing, recreational facilities) → mandate specified in legislation or similar • Asset contributing to specific good and service in conjunction with other property • Hold asset for disposal → part of ordinary course of operations

6. Investment property • Clarify application in GRAP 16 • Amount of revenue earned: • not important; rather why / how property used • Existence of lease: • in itself does not mean property is investment property • Rent: • does not need to be market related for property to be classified as investment property

7. Property, plant and equipment • Indicator based approach to assess useful lives & residual values • Annual assessment at each reporting date: may be too onerous • Introduction of indicator based approach • List of indicators • Only conduct detail assessment if one or more of indicators triggered

8. Property, plant and equipment • List of indicators • Composition of asset changed • Use of asset changed, because: • Entity changed manner in which asset is used • Entity changed utilisation rate of asset • Decision to dispose asset in future • Technological, environmental, commercial / other changes • Legal / similar limits on use of asset changed • Asset idle / retired from use

9. Property, plant and equipment • List of indicators (cont.) • Asset approaching end of previously expected useful life • Planned repairs and maintenance / refurbishments undertaken or delayed • Changes in environmental factors • Evidence that condition improved / declined • Asset assessed as impaired per GRAP 21 / GRAP 26

10. Property, plant and equipment • Use of external valuers • Independent and external vs. internal • member of valuation profession or another competent expert

11. Property, plant and equipment • Capital work-in-progress • Disclosure of cumulative expenditure capitalised → per class of asset • Construction of assets taking significantly longer than expected • Construction of assets stopped → reason & if assets impaired • Flexibility in disclosure

12. Property, plant and equipment • Review encouraged disclosures • Eliminated all • Fair values where cost model applied • Assets not utilised during reporting period • Assets retired from active use but not classified as discontinued operation

13. Property, plant and equipment • Repairs and maintenance • Separately disclose expenditure incurred to repair and maintain asset in notes • GRAP 16, GRAP 17, GRAP 103 • Include information on specific costs in amount disclosed  comparability

14. Transitional provisions

15. Effective date • Accountant-General approved effective date of 1 April 2016 • PFMA years ended 31 March 2017 • MFMA years ended 30 June 2017

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