Page 53 - Housing Solutions Annual Report

Valuation of housing properties
Management reviews its valuation of housing properties at each reporting date, based on either
formal valuation reports or an update to those reports based on market conditions and other changes
to assumptions. Uncertainties in these estimates relate to the discount rate, the cost of property
maintenance and future cash flows. Valued properties totalled £554m at the year end.

Useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at each reporting date,
based on the expected utility of the assets. Uncertainties in these estimates relate to technological
obsolescence that may change the utility of certain software and IT equipment and changes to decent
homes standards which may require more frequent replacement of key components.

Defined benefit obligation (DBO)
Management’s estimate of the DBO is based on a number of critical underlying assumptions such as
standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation
in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses
(as analysed in Note 27). The liability at 31 March 2020 was £18,168,000.
2.4 Basis of consolidation

The Group accounts consolidate the accounts of the Association and all its subsidiaries at 31 March
2020 using the purchase method.
2.5 Investment in subsidiaries and joint ventures

The consolidated financial statements incorporate the financial statements of the Association and
entities (including special purpose entities) controlled by the Group (and its subsidiaries). Control is
achieved where the Group has the power to govern the financial and operating policies of an entity so as
to obtain benefits from its activities.
All intra-Group transactions, balances, income and expenses are eliminated in full on consolidation.

Investments in subsidiaries are accounted for at cost less impairment in the individual Association’s
financial statements.
Investments in joint ventures are accounted for using equity accounting in the consolidated financial
statements.
2.6 Turnover and revenue recognition
Turnover comprises rental income receivable in the year, income from shared ownership first tranche
sales and other services included at the invoiced value (excluding VAT where recoverable) of goods and
services supplied in the year and grants receivable in the year.
Rental income is recognised from the point when properties under development reach practical
completion or otherwise become available for letting, net of any voids. Income from first tranche sales
and sales of properties built for sale is recognised at the point of legal completion of the sale. Charges for
support services funded under Supporting People are recognised as they fall due under the contractual
arrangements with Administering Authorities.
2.7 Taxation

Current tax is recognised for the amount of income tax payable in respect of the taxable surplus for the
current or past reporting periods using the tax rates and laws that have been enacted or substantively
enacted by the reporting date.
Deferred taxation
Deferred tax is recognised in respect of all timing differences at the reporting date, except as otherwise
indicated.
Deferred tax assets are only recognised to the extent that it is probable that they will be recovered
against the reversal of deferred tax liabilities or other future taxable profits. If and when all conditions
for retaining tax allowances for the cost of a fixed asset have been met, the deferred tax is reversed.
Deferred tax is recognised when income or expenses from a subsidiary or associate have been

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