Capitalisation Policy

Transcription

1 FA4.2 Capitalisation Policy (Intangible Assets other than Goodwill) Review Date: January 2020 North East Scotland College. All rights reserved. Page 1 of 3

2 PURPOSE AND AIMS OF THE CAPITALISATION POLICY (INTANGIBLE ASSETS OTHER THAN GOODWILL) To identify and capitalise all costs, related to the purchase of intangible fixed assets, in accordance with the Statement of Recommended Practice on Accounting for Further and Higher Education. DEFINITION An intangible asset is an identifiable non-monetary asset without physical substance. Such an asset is identifiable when: (a) It is separable, i.e. capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, wither individually or together with a related contract, asset or liability; or (b) It arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations. LIMITATIONS 1. An institution shall recognise an intangible asset if, and only if: (a) It is probable that the expected future economic benefits that are attributable to the asset will flow to the institution; and (b) The cost or value of the asset can be measured reliably. 2. An intangible asset purchased separately from a business must be initially recognised at its cost, as set out in paragraph of FRS An intangible asset acquired in a business combination must be capitalised separately and initially recorded at its fair value, where this can be measured with sufficient reliability. 4. An internally developed intangible asset may be capitalised from the date when the intangible asset first meets the recognition criteria set out in paragraph 18.4 and paragraph 18.8H of FRS102. Providing the recognition criteria are met, costs incurred during a development phase may be capitalised. North East Scotland College. All rights reserved. Page 2 of 3

3 Institutions should refer to guidance on what costs are eligible and ineligible for capitalisation as set out in paragraphs 18.8C and 18.8H to 18.8K of FRS Costs incurred during a research phase must be expensed as the asset does not meet the criteria for recognition at this stage. 6. Institutions may measure intangible assets after initial recognition using the cost model or, in certain circumstances, the revaluation model. The use of the cost model is expected to be widely used by institutions. 7. All intangible assets are considered to have finite lives which will be limited to the period of any contractual or legal rights (including any renewal periods where the cost of renewal is not significant). If institutions are unable to reliably estimate the useful life of an intangible asset, the life shall be presumed to be five years. Amortisation must be charged on a systematic basis over the useful life and institutions should follow the requirements of Section 18 of FRS 102 in relation to the review of the amortisation period and amortisation method and residual values. 8. Institutions should refer to Section 20 of this SORP in relation to the impairment of intangible assets. 9. Institutions should comply with the disclosure requirements set out in paragraphs to 18.29A of FRS 102. Status: Approved by the Vice Principal (Finance) Date of Version January 2017 Responsibility for the policy: Vice Principal (Finance) Responsibility for implementation: Financial Controller External Relations Responsibility for review: Vice Principal (Finance) Date for review: January 2020 Date of EIA: December 2009 North East Scotland College. All rights reserved. Page 3 of 3

4 Equality Impact Assessment (EIA) Form Part 1. Background Information. (Please enter relevant information as specified.) Title of Policy or Procedure. Details of Relevant Practice: Person(s) Responsible. FA 4.2 Capitalisation Policy Vice Principal Finance Date of Assessment: January 2017 What are the aims of the policy, procedure or practice being considered? Who will this policy, procedure or practice impact upon? As stated in the Policy. Suppliers of goods and services to the College. Part 2. Public Sector Equality Duty comparison (Consider the proposed action against each element of the PSED and describe potential impact, which may be positive, neutral or negative. Provide details of evidence.) Need Impact Evidence Eliminating unlawful discrimination, harassment and victimisation. No impact Advancing Equality of Opportunity All persons covered by this policy are treated the same way there is no need for any differentiation Policy document Promoting Good relations All persons covered by this policy are treated similarly with no groups or individuals identified separately Policy document EIA 1

5 Part 3. Action & Outcome (Following initial assessment, describe any action that will be taken to address impact detected) None required Sign-off, authorisation and publishing * Name: Roddy Scott Position: Vice Principal Finance Date of original EIA: 17/12/15 Date EIA last reviewed: January 2017 *Please note that an electronic sign-off is sufficient EIA 2