The objective of this procedure is to ensure that the value of fixed assets recorded in the School's Annual Financial Statements is correct and that the annual depreciation charged fairly represents the use of assets over their lives.

Definition

Fixed assets are physical assets that are held by the school for use in the production of supply of goods and services, for rental to others or for administrative purposes, and have been acquired or constructed with the intention of being used on a continuing basis.  Fixed assets may also include items for the maintenance or repairs of other assets.

Fixed assets are property, plant and equipment used by the school for more than 12 months, over which the school has control.

Cost (Valuation)

Land and buildings are owned by the Crown and are occupied on the basis of a property occupancy agreement.

Fixed assets that were transferred to the Board of Trustees on 1 October 1989 are recorded at valuation as at that date and have since been depreciated.

All other fixed assets are initially recorded at cost or, in the case of donated assets, initially recorded at their fair value at at the date of receipt.  Initial cost includes the purchase consideration, or fair value as the case may be, and those costs directly attributed to bringing the asset to the location and condition if necessary for its intended use.

Fixed assets are valued at historical cost.  Subsequent expenditure that increases or extends an asset's service potential is capitalised.

Where assets have been revalued the asset has been recorded at the last valuation.

Recognition

Items of property, plant and equipment with an individual value in excess of $300 are capitalised at the time of purchase.

Other items with an individual value below $300 are expensed with the exception of furniture and fittings that are purchased in quantity where the total value exceeds $300, such as classroom sets of desks and chairs. This is to reflect their significant total value as a percentage of the total assets held by the school.

Textbooks even when purchased in quantity, are recorded as a learning resource expense and not capitalised on purchase. This reflects the high usage and frequent curriculum changes that make textbooks obsolete.

Minor sports and teaching equipment even when purchased in quantity, are recorded as a learning resource expense and not capitalised on purchase.This reflects the need for regular replacement of these items and their overall low total value when compared to the total fixed asset holding.

Depreciation

Fixed assets are depreciated on a systematic basis.  Fixed assets, except for library books, are depreciated so as to charge their cost or value over their estimate useful life on a straight-line basis. Library books are depreciated on a diminishing value basis.

Estimated Useful Lives are:

• Office equipment - 5 to 10 years
• Teaching equipment - 5 to 10 years
• Computer equipment - 5 years
• Furniture and fittings - 10 years
• Maintenance equipment - 10 years
• Electronic equipment - 4 to 10 years
• Plant & machinery - 5 to 10 years
• Library is depreciated on a diminishing value basis at 12.5% per annum
• Lease equipment is depreciated over the lease period term (When classified as a financial lease)

Gain/Loss on Disposal

Where a fixed asset is disposed of, the gain or loss recognised in the Statement of Financial performance is calculated as the difference between the sales price and the book value of the fixed asset.

Where a fixed asset is written off because it is now obsolete or beyond repair the gain or loss recognised in the Statement of Financial performance is the book value of the fixed asset.

Review

The school will review the useful life and method of depreciation for each category of fixed assets to ensure they are appropriate each year.

A physical stock take of fixed assets at regular intervals must be implemented and this will more accurately verify the physical existence and ensure that the true cost of fixed assets is reflected in the school's financial statements.

About Us

CES is a school-owned organisation specialising in the provision of goods and services to the education sector. For more information about the services we provide (including asset management) please visit our website www.cessl.org.nz, call us free on 0800 205 267 or drop us an email at info@cessl.org.nz.

If you are specifically interested in our asset register management services please read our School Asset Register Management brochure.