Page 56 - Housing Solutions Annual Report

Grants due from government organisations or received in advance are included as current assets or
liabilities.
Government grants received for housing properties are subordinated to the repayment of loans by
agreement with the HCA. Government grants released on sale of a property may be repayable but are
normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the
statement of financial position in creditors.
If there is no requirement to recycle or repay the grant on disposal of the asset, any unamortised grant
remaining within creditors is released and recognised as income in income and expenditure. Upon
disposal of the associated property, the Group is required to recycle grant proceeds and recognise them
as a liability.

Other grants
Grants received from non-government sources are recognised using the performance model. A grant
which does not impose specified future performance conditions is recognised as revenue when the
grant proceeds are received or receivable. A grant that imposes specified future performance-related
conditions on the Association is recognised only when these conditions are met. A grant received before
the revenue recognition criteria are satisfied is recognised as a liability.
Properties for sale
Shared ownership first tranche sales, completed properties for outright sale, and property under
construction are valued at the lower of cost and net realisable value. Cost comprises materials, direct
labour and direct development overheads. Net realisable value is based on estimated sales price after
allowing for all further costs of completion and disposal.
Capitalisation of Interest
Interest is capitalised on borrowings to finance developments to the extent that it accrues in respect of
the period of development if it represents either:
• interest on borrowings specifically financing the development programme after deduction of social
housing grant received in advance; or

• a fair amount of interest on borrowings of the Association as a whole after deduction of social housing
grant received in advance to the extent that they can be deemed to be financing the development
programme.

Other interest payable is charged to the income and expenditure account in the year.
2.14 Investment properties
Investment properties consist of commercial properties and other properties not held for the social
benefit or for use in the business. Investment properties are measured at cost on initial recognition
and subsequently at fair value as at the year end, with changes in fair value recognised in income and
expenditure.
2.15 Other tangible fixed assets
Other tangible fixed assets are measured at cost less accumulated depreciation and any accumulated
impairment losses.
Depreciation is provided evenly on the cost of other tangible fixed assets to write them down to their
estimated residual values over their expected useful lives. No depreciation is provided on freehold land.
The principal annual rates used for other assets are:
Other freehold property 100 years

Free/Leasehold premises’ improvements 21 years
Office furniture and equipment 5 years
Computer equipment 5 years

Motor vehicles 5 years
Plant & machinery 25 years

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