Page 57 - Housing Solutions Annual Report

Gains or losses arising on the disposal of other tangible fixed assets are determined as the difference
between the disposal proceeds and the carrying amount of the assets and are recognised as part of the
surplus/deficit for the year.

2.16 Intangible assets
Intangible assets are measured at cost less accumulated amortisation.
Amortisation is provided evenly on the cost of intangible assets to write them down to their estimated
residual values over their expected useful lives. The principal annual rate used for intangible assets is:
Computer software 5 year
2.17 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership of the leased asset to the Group. All other leases are classified as operating
leases.
Rentals payable under operating leases are charged to income and expenditure on a straight-line basis
over the lease term, unless the rental payments are structured to increase in line with expected general
inflation, in which case the Group recognises annual rent expense equal to amounts owed to the lessor.
The aggregate benefit of lease incentives are recognised as a reduction to the expense recognised over
the lease term on a straight-line basis.

2.18 Provisions for liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of
a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the
present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the
obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is
recognised as a finance cost in profit or loss in the period it arises.
The Group recognises a provision for annual leave accrued by employees as a result of services
rendered in the current period, and which employees are entitled to carry forward and use within the
next 12 months. The provision is measured at the salary cost payable for the period of absence.
2.19 Revaluation Reserve
When housing properties are revalued, the difference between the carry value of the land and structure
elements of housing properties is credited to the housing property revaluation reserve. Where a
downward movement is taken to the surplus or deficit a transfer from income and expenditure reserve is
made for the net of the downward movement and the value of any associated grant released to income.

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16645.02 HS Annual Report 86pp A4 v10.indd 57
16645.02 HS Annual Report 86pp A4 v10.indd 57 10/11/2020 13:35