In most instances, an item of property, plant and equipment is initially recognised at its cost. Where an asset is acquired through a non-exchange transaction, it is recognised at its fair value at the date of acquisition. Disposals Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are reported as a net amount in the surplus or deficit in the statement of comprehensive revenue and expense. 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-today 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 Intangible assets Software acquisition When configuring and implementing software solutions, the Commission assesses whether related expenditure creates an item that can be identified and separated from the Commission, is under the control of the Commission, and will provide future economic benefits or service potential. Acquired computer software is capitalised based on the costs incurred to acquire and bring to use the specific software. Where such criteria are not met, costs to configure software are expensed. Costs associated with maintaining computer software, the development and maintenance of the Commission’s website, and staff training costs are recognised as an expense when incurred. Amortisation The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each financial year is recognised in the surplus or deficit in the statement of comprehensive revenue and expense. The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows: Acquired software 3–5 years 20–33% Equipment 2–12 years 8.3–50% Furniture and fittings 5–17 years 5.9–20% Impairment of property, plant and equipment and intangible assets 8.3–11.1% Cash-generating assets Leasehold improvements 9–12 years 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 Commission does not hold any property, plant and equipment or intangible assets that are cashgenerating. Assets are considered cash-generating where their primary objective is to generate a commercial return, otherwise they are considered non-cash generating. The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year-end. Annual Report 2019 75