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THE REVALUATION MODEL

The asset is carried at a revaluedamount, being its fair value at the date

of the revaluation, less subsequentdepreciation and subsequentimpairment, provided that fair valuecan be measured reliably.

DEPRECIATIONI The depreciable amount (cost less

residual value) should be allocated on asystematic basis over the assets usefullife.

I The residual value, the useful life andthe depreciation method of an assetshould be reviewed at least at eachfinancial year-end.

I Changes in residual value, depreciationmethod and useful life representchanges in estimates and are

accounted for prospectively inaccordance with GRAP 3 Accountingpolicies, changes in accountingestimates and errors

I Depreciation is charged to surplus ordeficit, unless it is included in thecarrying amount of another asset.

I Depreciation begins when the asset isavailable for use

I Revaluations should be carried outregularly (the carrying amountshould not differ materially from itsfair value at the reporting date).

I If an item is revalued, the entireclass of PPE to which that assetbelongs should be revalued.

I Revalued assets are depreciated thesame way as under the cost model.

I An increase in value is credited to a

revaluation surplus unless itrepresents the reversal of arevaluation decrease of the sameasset previously recognised insurplus or deficit; in this case theincrease in value is recognised insurplus or deficit.

GRAP 17 (IAS 16) Property, Plant and EquipmentEffective date: Periods commencing on or after 1 July 2008 for High and Medium capacity municipalities, 1 July 2009 for Low capacity and 1 April 2009

for Schedule 3A and 3 Public entities and Constitutional Institutions

2008 KPMG Services (Proprietary) Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Allrights reserved. Printed in South Africa. Although we endeavour to provide accurate and timely information, this is only a summary of Grap 17 (IAS 16) Property, Plant and Equipment, there can be noguarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice aftera thorough examination of the particular situation. KPMG shall retain ownership of the summary and all other intellectual property rights in this document. KPMG and the KPMG logo are registered trademarksof KPMG International, a Swiss cooperative.

DERECOGNITIONI Remove the asset from the statement of

financial position on disposal/ when no futureeconomic benefits or service potential areexpected from its use or disposal.

I The gain or loss on derecognition is thedifference between the net disposal proceeds, ifany, and the carrying amount and should berecognised in surplus or deficit.

I When a revalued asset is disposed of, anyrevaluation surplus is transferred directly toaccumulated surpluses or deficits.The transferto retained earnings is not made through surplusor deficit.

COMPONENTACCOUNTINGI Significant parts/components should be depreciated

over their estimated useful life.

I Costs of replacing parts should be capitalised and theexisting parts being replaced should be derecognised.

HERITAGE ASSETSChoice to either:

a) Recognise and therefore disclosure in terms of GRAP

17, not required to apply measurement criteria or

b) Not recognise and show disclosure

OTHER

For each class of PPE disclose:I Basis for measuring gross carrying amount;I Depreciation method(s) used;

I Useful lives or depreciation rates;I Gross carrying amount and accumulated depreciation and impairment losses;I Reconciliation of the carrying amount at the beginning and the end of the period, showing:

- Additions, disposals, acquisitions through business combinations, revaluation increases, impairment losses,reversals of impairment losses, depreciation, net foreign exchange difference on translation and othermovements.

I Additional disclosure requirements in respect of revalued assets

DISCLOSURE

RECOGNITION AND INITIAL MEASUREMENT

MEASUREMENT SUBSEQUENTTO INITIAL RECOGNITION

Recognise when it is probable that:I The future economic benefits or service potential associated with

the asset will flow to the entity; andI the cost or the fair value of the asset can be reliably measured.

Measurement :I Initially recorded at costI Where an asset is acquired at no cost, or for a nominal cost, its cost

is its fair value as at the date of acquisition.

Cost comprises:I Purchase price plus import duties and non-refundable taxes, net of

trade discounts and rebates;I Any costs directly attributable to bringing the asset to the location

and condition necessary for it to be capable of operating in a mannerintended by management.

I The initial estimate of the costs of dismantling and removing theitem and restoring the site on which it is located.

I May also include borrowing costs incurred on qualifying assets

AVAILABLEGuidance on

Infrastructure assets

COST MODEL

The asset is carried at cost lessaccumulated depreciation and

accumulated impairment