Subsequent costs Costs incurred after initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to the Commission and the cost of the item can be measured reliably. The costs of day-to-day servicing of property, plant and equipment are recognised in the surplus or deficit in the statement of comprehensive revenue and expense as they are incurred. Depreciation Depreciation is provided on a straight-line basis on all property, plant and equipment at rates that will write off the cost of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of property, plant and equipment have been estimated as follows: Equipment 2–13 years 7.6–50% Furniture and fittings 3–20 years 5.0–33% Leasehold improvements 3–12 years 8.3–33% Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvement, whichever is the shorter. The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year-end. Intangible assets Software acquisition Fees to access the supplier’s application software in a SaaS arrangement: Where the SaaS contract only gives the Commission a right to receive access to the supplier’s application software, that access in the SaaS arrangement would usually not result in the recognition of an intangible asset due to lack of control over an identified asset. This is because the SaaS provider usually holds, manages, and updates the SaaS application software over the period of the arrangement. However, where the Commission receives rights beyond a right of access, this could indicate there is an intangible asset under PBE IPSAS 31 Intangible Assets or the arrangement contains a finance lease under PBE IPSAS 13 Leases. If the fees associated with the access to the software of a SaaS arrangement give rise to an intangible asset, then these are recorded against the intangible asset as part of its cost. If fees associated with the access to the software of a SaaS arrangement do not give rise to an intangible asset or finance lease, they are viewed as payments for services and are expensed as incurred (generally over the term of arrangement). Configuration and customisation costs related to SaaS: If the Commission controls the software in the SaaS arrangement and is recognising an intangible asset for the SaaS, then the configuration and customisation costs of that software are capitalised as an intangible asset. If the SaaS has been assessed as not an intangible asset of the Commission and the configuration and customisation to the SaaS provider’s application software are performed by the Commission or its contractors, those costs are expensed as they are incurred. However, if the configuration and customisation work is performed by the SaaS provider, or their subcontractor, further analysis of the costs is required to determine if they should be expensed as the configuration and customisation services are incurred (usually upfront) and recognising a liability if the costs are paid over the term of the arrangement or spread over the term of the SaaS arrangement (recognising a prepayment if paid upfront). For configuration and customisation related costs that are paid upfront (as opposed to payments throughout the service term), if the configuration and customisation services delivered to the Commission are distinct from the delivery of the SaaS access services, then 61