ROAD ASSET

ENERGIZER
MANAGEMENT OF
LEARNING Company Logo
 Management of Learning from
Yesterdays’ Lesson: 3 Things
AHA! YES!
 Struck/Understood/l Affirmed/Confirmed
earned/New

HMM??
Feeling/Clarification/
For Recommendation/Improvement

08/05/2020
I. ROAD
ASSET
INTRODUCTI
ON
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Today’s Overview/Objectives
• Familiarization on the
1 concept and relevance of
Road Asset Valuation

• Review COA and other

2 Guidelines on Road Valuation

• Develop Action Points and

3 Recommendations
 There is always a beginning…Working
Toward Mastery

Achieve
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Mastery
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Projects Worked On

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Time Spent
Three Essential Questions in AV

1. What assets do we
have?

2. What is their condition

or status?

3. What valuation
method should be
used and what is
their value?
Asset Value Defined
“Asset value is the calculation of the current
monetary value of an organization’s assets.
The current monetary value is evaluated as the
Depreciated Replacement Cost (DRC) of a road
assets, where:

DRC =
Gross Replacement
Cost – Accumulated
Consumption

IMM Section 3.10

Asset Valuation Defined
• “Asset valuation is an essential
management tool. It assists in the
determination and allocation of
costs and provides
performance/rate of return
reporting, resource allocation,
shareholder equity and
accountability.”

• The process of determining the

worth of an asset or liability. IMM Section 3.10
Asset Valuation Defined
• “Valuation is the process of
determining the “Economic Worth”
of an Asset or Company under certain
“Assumptions” and “Limiting
Conditions” and subject to the “Data”
available on the “Valuation Date”

Source -International Valuation

Standard Council

IMM Section 3.10

Valuation of Assets
• Inventory and valuation for bookkeeping
• Can be defined in many ways
- book value
- written down value
- market value
- replacement value
- present value
- nominal value
- real value, taxable value and utility value
• Definition of yearly expenses and capital investment
costs.
Purpose of RAV
1.Enable reporting in monetary terms to reflect
physical conditions of the road network
2.Document the financial value of the road
infrastructure assets owned and its balance
sheet.
3.Describe the importance of the road asset and
investment ( amount of capital investments
that have been made) in financial terms
4.Rationalize the annual need for financing
Road asset Valuation and Management, Chaitanya Goyal, The Masterbuilding,
Feb. 2012 and (PIARC 2008-a).
Purpose of RAV

4. Assist asset managers in informing asset

owners of the effects of different financing
strategies.

5. Build the case for the development of

more cost-effective maintenance and
replacement programs that will
maintain the value of the road asset
Road asset Valuation and Management, Chaitanya Goyal, The Masterbuilding,
Feb. 2012 and (PIARC 2008-a).
Benefits of Adopting Asset Valuation
• Long-term financial planning and
budgeting;

• Influence over senior decision

makers’ investment decisions;

• Performance assessment and

benchmarking;

• Prioritization of resource allocation,

locally, regionally, and nationally;
Benefits of Adopting Asset Valuation

• Production of transparent
information for stakeholders on the
organization’s management of its
road assets;
• Determine the change in service
potential of a group or class of
assets
• Production of financial information
that is compliant with local or
International Financial Reporting
Standards (IFRS)
Things to Consider in
RAV

• The principal issues in RAV are the:

a. Recognition of assets,
b. Determination of their carrying amounts,
c. Deterioration charges and impairment losses to be
recognized. 1

• Valuations of any type require the valuator to apply one

or more valuation approaches 2
1/Online: Infrastructure Asset Management. The valuation of complex objects
2/NAMS Group, 2006:
Scope of RAV

Road Asset Evaluation Models,

Karol Opara
Stages of Road Asset Valuation
1. Definition and Inventory
of assets
2. Valuation of the assets
and reporting them in
monetary terms
3. Implementing
accounting and financial
reporting
4. Integration of road
management and
accounting
Premise in Road
Valuation
• Each asset has an
a. economic value
b. capital value
• Valuation in monetary terms in a key element
in developing the common language and
knowledge between engineers and finance
and between road administrators (CE, Mayor)
and its stakeholders
Asset Valuation Principles of Financial
Accounting
• Reliability – depedended, no bias, no material
error and prudent approach.
• Comparability – can be compared with previous
accounting period and with similar information or
items (ex. Pavement)
• Materiality – all information is included that might
have an influence on the financial statements
• Understandability
Legal Basis in the Philippines
• Item 6.1.f.1 COA Circular 2015-002
provides that “An entity shall recognize the cost and the related
accumulated depreciation and impairment losses of existing
public infrastructure assets based on the data in the Registry of
Public Infrastructures (RPIs) previously maintained under the
NGAS and the estimated useful life as may be determined by
competent authority, if practicable...”
“If not practicable, the alternative approach of depreciated
replacement cost approach may be used to determine the cost
and the accumulated depreciation. The Depreciated Replacement
Cost Approach is an approach used to determine the value in use
of a non-cash generating asset. The replacement cost of an asset is
the cost to replace the asset's gross service potential...”

• COA Circular 2015-008

Accounting and Reporting Guidelines in the Local Roads and
Management System

• Philippine Valuation Standards

• DPWH Guideline
Calculating Asset Value - International
Standards/Practice
• Roads are mostly publicly owned,
will not have a value if sold on the
open market unless the buyer is
permitted to recover their
investment through mechanisms
such as tolling.

• Calculating road asset value must

follow the accounting standards.
Calculating Asset Value - International
Standards/Practice
• Assets are valued on the basis of
its 'replacement cost of the
asset's future economic
benefits'. This is its fair value
Basis of the Valuation Process
• Replacement Value: Established by applying
unit rates of replacement to an asset quantity
• Written Down Value/Book Value: The
current or written down value WDV of the
assets is established by factoring back the
replacement value based on the asset
condition or on the age of the asset
• Annual Depreciation: Derived by dividing
the replacement value by the expected asset
service life.
Basic Accounting Terms in Calculating Asset
Value
• Book Value – The amount at which an asset is
recognised after deducting any accumulated
depreciation and any accumulated impairment
losses. Also known as Carrying Amount, Written
Down Replacement Cost
• Net Asset Value
• Straight line Method
Asset Classification

Assets need to be grouped in a consistent manner

for
• aggregation to local or national purposes
• determine actual expenditure
• estimate spending need for an asset class,
• allow benchmarking of performance
• track performance over time.
Classifications that may be used are shown in Table
3.3.5. The list is not exhaustive.
Asset Classification
Asset Classification
Cost Drivers for DRC
1. Pavement type – rigid, flexible or composite.
2. Type of carriageway – single or dual
carriageways differ in terms of the central
reservation, kerbs and safety fences.
3. Road hierarchy – influences the design
specifications (construction form and road
layout), the materials used and traffic
management costs.
4. Number of lanes – this influences the width of
the carriageway and impact on the Unit Rate
per m due to economies of scale in
construction.
Cost Drivers for DRC
5. Location – the composition of the road asset
may be different between rural and urban
areas, and the construction costs incurred
are likely to have a different composition,
e.g. site access and traffic management.
6. Traffic Loading – has an influence on the
design and materials.
7. Earthworks – the volume of earthworks
required and the ground conditions, e.g.
embankments, cuttings, marshy or rocky
ground conditions.
8. Footway/cycleway – whether or not the
road has an attached footway and/or
cycleway.
Principal Approaches in Valuation:
• Income Approach - value of an asset is determined by
reference to the value of income, cash flow or cost savings
generated by the asset (Salvage value, discount rate, disposal
cost and cash flow forecast)
• Cost approach - value using the economic principle that a
buyer will pay no more for an asset than the cost to obtain
an asset of equal utility, whether by purchase or by
construction, unless undue time, inconvenience, risk or
other factors are involved.
• Market approach provides an indication of value by
comparing the asset with identical or comparable(that is
similar) assets for which price information is available
LG Valuation Survey: -What are the
specific issues and challenges
1. Accounting for flood damage
2. Access to reliable unit rates
3. Ensuring that each new valuation accurately reflects all new capital work
undertaken.
4. Cost of valuation
5. Inconsistency in methodology and unit rates between valuations and
valuers
6. Inconsistency between condition surveys
7. Data completeness and quality
8. Residual value and useful lives
9. Size of network, condition assessment
10. Council resourcing
11. Remote location
12. Unit rate verification by auditors
13. Variation of unit rates across large LG areas
14. Lack of historical construction dates and estimating remaining useful life
II. STEPS IN VALUATION

Company Logo
Steps in Valuation (adopted by World
Road Association)
1. Establish the principles,
basis, and rules for asset
valuation. These should
comply with the valuation
requirements provided.
Steps in Valuation (adopted by World
Road Association

2. Compile an asset
inventory that provides the
base data for calculating
asset values for all road
infrastructure assets.
Steps in Valuation (adopted by World Road
Association

3.Calculate the initial value of the

road infrastructure assets. This
involves the following:

– Deriving appropriate unit rates for the

different asset groups and subgroups
– Calculating the gross replacement
cost for each asset within a group or
subgroup
Steps in Valuation (adopted by World
Road Association)

4. Calculate the consumption

of the assets, which involves
the following:
– Calculating in-year
depreciation
– Assessing for in-year
impairment and calculating
loss in value when required
Steps in Valuation (adopted by World Road
Association)

5. Calculate the depreciated replacement

cost, which involves the following:
Calculating the depreciated replacement cost by
reducing the replacement cost to reflect the
current age, condition, and performance of
assets
Annual adjustments to the asset value to
account for in-year depreciation and impairment

6. Prepare the valuation report.

Valuation Report
1. Summary of Valuation procedures and principles (with
appropriate reference)
2. Assumptions made in producing the asset values and an
indication of the accuracy or confidence in the valuation
numbers
3. The number/quantity of assets included in asset valuation
subdivided by type, group and sub-groups and presented
in a graphical or tabular format. Explanation should be
provided for any road assets excluded.
4. Summary of the in-year movements to the asset stock –
additions and deletions.
5. Summary of the standardized unit rates and service lives
used in asset valuation.
Valuation Report
6. Summary of current levels of service and the associated
performance measure by asset type and group. This may
include current and desired levels.
7. The GRC, DRC, Depreciation and impairment values by
asset type and group presented in a tabular format
including identification and explanation of any significant
changes compared to the previous valuation.
8. Asset preservation measures including graphical plots and
trends with time, and where possible, a compilation of
these against other similar LGUs.
Double double this this
double double that that
double this double that
double double this that
 IV. DPWH INFRASTRUCTURE
REGISTRY MANUAL (GUIDELINES)

The Government Accounting Manual (GAM) developed by the Commission on

Audit (COA) prescribed under COA Circular 2015-007 dated OctoberCompany
22, 2015Logo
is
the major source in the development of this manual.
Accounting for Infrastructure Assets
Infrastructure Assets is a stationary system forming a network and
serving whole communities, where the system as a whole is intended to
be maintained indefinitely at a particular level of service potential by
the continuing replacement and refurbishment of its components.
The network may include normally recognized ordinary assets as
components.

Infrastructure Projects include the construction, improvement,

rehabilitation, demolition, repair, restoration or maintenance of
roads and bridges, railways, airports, seaports, communication facilities,
civil works components of information technology projects, irrigation,
flood control and drainage, water supply, sanitation, sewerage and solid
waste management systems, shore protection, energy/power and
electrification facilities, national buildings, school buildings, hospital
buildings and other related construction projects of the government.
Recognizing Cost of PPE as Assets

In accordance with the GAM Volume 1, Chapter 10, the cost

of an item of PPE shall be recognized as assets if, and only if:

a. It is probable that the future economic benefits or service

potential associated with the item will flow to the entity;
b. The cost or fair value of the item can be measured reliably;
c. Beneficial ownership and control clearly rest with the
government;
d. The asset is used to achieve government objectives; and
e. It meets the capitalization threshold of P15,000.
Capitalized or Expense
Capitalized or Expense
Capitalized or Expense
Capitalized or Expense
Capitalized or Expense
Ownership of Projects
Ownership of Projects
Physical Inventory
• Report on Physical Count of PPE – December 31 of every year
and submitted to the Auditor not later than January 31
• Due to the stationary nature of roads and bridges, the conduct
of physical inventory is not practical. RBIA (Roads and Bridges
Information Application) will be the official source of
information to enable to update the road and bridge inventory.
• Until a new infrastructure registry system is implemented in
DPWH, the RBIA shall remain and subject to annual update.
• The Physical inventory in this section shall be used as basis of
periodic reconciliation of the PPE accounts to ensure accuracy
and reliability of the physical and financial data at any given
time.
• Flood structures, since not included in RBIA, annual inventory
shall be performed by each implementing office under the
guidance of PMO for Flood control.
Sec. VI. Accounting of Infrastructure Assets
Sec. VI. Accounting of Infrastructure Assets
Recognition Principle
• Under recognition principle, an entity shall
evaluate all its PPE costs at the time they are
incurred. These costs include cost incurred
initially to acquire or construct an item of PPE
and costs incurred subsequently to add to,
replace part of, or service the PPE.
Characteristics of Infrastructure (road) assets

a. Part of a system or network;

b. Specialized in nature and do not have
alternative uses;
c. Immovable; and
d. May be subject to constraints on disposal.
Initial Recognition of Infrastructure Assets
(Road) under DPWH
• All Infrastructure Projects completed as of December 31, 2014 and
prior, in compliance with Department Order No. 176, series of 2015
(dated November 23, 2015).
• The accounting activity involves recording in the books of accounts of
the Department the Inventory generated from the RBIA for Roads and
Bridges nationwide, and the Inventory of completed Flood Control
Structures submitted by the Bureau of Maintenance and the PMO for
Major Flood Control.
• The costing/revaluation of the Infrastructure assets of the department
was based on the Estimated Replacement Cost officially prepared and
maintained by the Bureau of Construction.
• The PPE/Asset identifier for the purpose of Accounting is specified
under the Infrastructure Assets Registry
Sec. VI. Accounting of Infrastructure Assets

• Pro-forma accounting entry to record the

initial recognition of Infrastructure Assets are
as follows:
 Sec. VI. Accounting of Infrastructure Assets:
VI.1.b. Subsequent Recognition
• Infrastructure Projects completed starting January 2015 and onwards
shall, subject to the policies provided under the PPSAS and the COA-GAM,
be regularly recognized as an Infrastructure Assets upon completion.
• The cost to be adopted in the recognition of these assets shall be based on
the actual related disbursements of the projects from the time it was
implemented until its completion. Such cost shall include capitalized
expenditures charged against Engineering and Administrative Overhead
(EAO) allocation which is identified to be directly related to the project.
• The recording of infrastructure assets subsequent to initial recognition
starts upon completion of the infrastructure project. The recognition shall
be based on financial completion (i.e., final billing that includes Certificate
of Completion, As-built Plan, Final Inspection Report, etc.). At this point
the Construction-in Progress (CIP) account is being closed to the
Infrastructure Asset account. The Asset shall have its new PPE number
based on the requirement under the Infrastructure Assets Registry
section
Sec. VI. Accounting of Infrastructure Assets
- RROW
Sec. VI. Accounting of Infrastructure Assets:
VI.1.b.1 Newly Constructed/Completed Infra
projects
Sec. VI. Accounting of Infrastructure Assets
- Donor
Sec. VI. Accounting of Infrastructure Assets
- Donor
Sec. VI. Accounting of Infrastructure Assets
- Donor
Sec. VI. Accounting of Infrastructure Assets
- Donor
Sec. VI. Accounting of Infrastructure Assets
- Donor
Sec. VI. Accounting of Infrastructure Assets -
Estimated Replacement Cost
Sec. VI. Accounting of Infrastructure Assets -
Estimated Replacement Cost
Recognition of Impaired Assets
• Impairment is a loss in the future economic benefits or
service potential of an asset, over and above the systematic
recognition of the loss of the asset’s future economic
benefits or service potential through depreciation.
• Impairment of infrastructure assets shall be recognized in
the books of accounts of the department immediately after
the occurrence of events, and if the events occurred after
the report date but prior to the issuance of the Financial
Statements, such occurrence shall be treated as “Events
after the Reporting Date” which shall be included in the
Notes to Financial Statements, if significant.
Indications of Impaired Assets
• Evidence is available of physical damage of an asset;
• Significant long-term changes with an adverse effect on the entity have
taken place during the period, or are expected to take place in the near
future, in the extent to which, or manner in which, an asset is used or is
expected to be used. Example are assets becoming idle, plans to
discontinue or restructure the operation to which an asset belongs,
or plans to dispose of an asset before the previously expected date and
reassessing the useful life of an asset as finite rather than indefinite;
• A decision to halt the construction of the asset before it is complete or
in a usable condition; and
• Evidence is available from internal reporting that indicates that the
service performance of an asset is, or will be, significantly worse than
expected…”
Depreciation
• Depreciation of an asset begins when it is available for use such as when it is
in the location and condition necessary for it to be capable of operating in the
manner intended by management. For simplicity and to avoid proportionate
computation, depreciation shall be for one month if the PPE is available for
use on or before the 15 of the month. However, if the PPE is available for use
after the 15th of the month, depreciation shall be for the succeeding month.
• Depreciation of an asset ceases when the asset is derecognized. Therefore,
depreciation does not cease when the asset becomes idle or is retired from
active use and held for disposal unless the asset is fully depreciated.
• The straight line method of depreciation shall be adopted future economic
benefits or service potential.
• There are three factors an entity must consider in determining depreciation:
1. Initial cost,
2. Useful life, and
3. Expected residual value at the end of its useful life.
Estimated Useful Life of Assets
Residual Value
• A residual value equivalent to at least five percent (5%) of the cost shall be adopted unless a
more appropriate percentage is determined by the entity based on its operation subject to
the approval of COA.

• Generally, infrastructure assets have no residual value. In case, the residual value of parts of
the infrastructure assets can be determined, the policy of at least five percent (5%) of the cost
of that part shall be applied.

• Considering that there is no scrap or salvage expected to be recovered from the infrastructure
assets at the end of the asset's useful life or when it is demolished or destroyed, no residual
value shall be recognized in computing the depreciation of Infrastructure Assets.

• This means that the depreciation is allocated at 100% of the cost of the infrastructure asset,
and the monthly depreciation expenses is arrived at by dividing the total cost of the asset by
the total number of months of its estimated useful life.
Revaluation

• PPE acquired through a non-exchange transaction, such as donation, presidential

proclamation, taxes, transfers and grants, its cost shall be measured at its fair value as at the
date of acquisition. However, this does not constitute revaluation. If the fair value cannot be
determined, the asset shall be recorded at a nominal value (the value that is stated on
currency or face value).

• Revaluation of fixed assets is an accounting model involving the process of increasing or

decreasing the carrying value of an asset in case of major changes in fair market value of such
asset. In this model, an asset is initially recorded at cost but its carrying amount is
subsequently adjusted upward or downward to account for any appreciation or downfall in
value.

• For the purpose of this manual however, revaluation shall not be applied to infrastructure
assets in the books of accounts of the department.
Improvement and Replacement
• An improvement is the substitution of a better asset or part of an asset that is
currently used, while a replacement is the substitution of a similar asset or part of an
asset, for the one being used. Sometimes it is difficult to differentiate improvements
and replacements from normal repairs. If the expenditure increased the future
service potential of the asset, it should be capitalized. If the expenditure
maintains the existing level of service, it should be expensed as a normal
repair. A capitalization threshold should be applied.

• To capitalize expenditure as an improvement or replacement, record the new asset

being acquired and drop the old asset from the fixed asset records.

• For the purpose of this manual however, improvement and replacement shall not be
applied to infrastructure assets in the books of accounts of the department, instead
the recognition/derecognition procedures as discussed above shall be applied.
Rehabilitation, Reconstruction and
Upgrading
• Rehabilitation (refurbish) refers to the Works to rebuild or replace
parts or components of an asset, to restore it to a required
functional condition and extend its life, which may incorporate
some modification. Generally involves repairing the asset to deliver
its original level of service (i.e. heavy patching of roads, slip-lining of
sewer mains, etc.) without resorting to significant upgrading or
renewal, using available techniques and standards.
• Rehabilitation and Reconstruction involves reconditioning of an
existing asset by replacing major worn-out components.
• If the cost involved meets the capitalization threshold as provided
for in the GAM, the project must be capitalized and thus
subsequently be recognized
Rehabilitation, Reconstruction and
Upgrading
• Normally, rehabilitation, reconstruction or upgrading is capitalized
especially when these are funded under the Capital Outlay, and in
these instances, the CIP – Infrastructure Assets (10699020-00)
account is utilized in recognizing the transaction.
• In cases however, that the rehabilitation, reconstruction or
upgrading falls under the repair and maintenance, or those that
does not meet the criteria for capitalization threshold, then these
transactions should be treated as expense, utilizing the Repairs and
Maintenance - Infrastructure Assets - Road Networks (50213030-01)
and Repairs and Maintenance - Infrastructure Assets - Flood Control
Systems (50213030-02) for Road Networks and Flood Control
Structures, respectively, as a debit in the accounting entry.
Repairs and Maintenance
• Repairs and maintenance primarily maintain or improve
the functionality and capacity of the PPE; increase its
service life; improve the quality of its output; or reduce the
operating cost. These may be categorized into major and
minor repairs.
• Minor repairs shall be directly charged to expense account
“Repairs and Maintenance” of the specific PPE while major
repairs shall be added to the carrying amount of the PPE
and shall be depreciated over the remaining life of the
PPE. Where cost cannot easily be differentiated between a
minor or major repair, it shall be treated as expense.
Repairs and Maintenance
a. Catastrophic failure maintenance & repairs such as
large-magnitude earthquakes, typhoons, cyclone, etc.
– Expenditures for repairs of major damage is classified as
capital expenditures since this type of work is usually
considered to be replacement in whole or large part,
thereby extending the life of the asset to a considerable
number of years.
– Minor damage resulting from catastrophic failure will
normally be classified as expense work since expenditures
for repairs normally only return the asset to its original
condition, and do not extend the life of the asset.
Repairs and Maintenance
b. Recurring replacement such as a road resurfacing or bridge requiring retrofitting every
few years or non-recurring replacement like replacing guardrails as part of the road safety
fixtures. Under the recognition principle, an entity recognizes in the carrying amount of an
item of PPE the cost of replacing part of such an item if the recognition criteria are met. The
carrying amount of those parts that are replaced is derecognized.

c. Repairs and maintenance which are necessary to obtain the expected service potential
of a capital asset for its estimated useful life are not betterments. These costs shall be
expensed when incurred. These include repairs to restore assets damaged by fire, flood,
accidents or similar events, to the condition just prior to the event; and routine
maintenance and expenditures, such as repainting, vegetation control, sight benching,
pavement marking, cleaning and replacing minor parts.

• Where a cost cannot easily be differentiated between a repair and betterment, the
cost shall be treated as an expense with respect to the accounting principle of
conservatism.
Infrastructure Assets Registry
• One of the long term plans of the department is to
develop an automated system that
• would handle the necessary information of
Infrastructure Assets in the entire agency. The planned
• system integrates physical data from various systems
like RBIA, BMS, PCMA, IFMW, etc. with the
• financial management system like the eNGAS.
• The initial Infrastructure Asset Registry is being
maintained in the eNGAS.
Asset Registry Data
Asset Registry Property Number
Asset Registry Property Number
Asset Registry Description
The description of the road asset that includes
Road name, road functional classification,
location, surface type, pavement type,
carriageway width, number of lanes,
drainage start and end, and the length of
the specific drainage for Roads. Start
drainage, end drainage, length,
Asset Registry Description

For Bridges, description of the asset includes the

Bridge name, type, length (in meters), the road name
where the bridge is located, and the location as to
specific Barangay, Municipality/City and the Province.

For Flood Control Structures, the description of the

asset includes the Flood Control Structure Name, the
Structure Type, the Location, and Length of the
structure.
Asset Registry Estimated Useful Life
• Estimated useful life is the expected life span of the assets
to be productive based on normal wear and tear
condition.
• Useful Life is the period over which an asset is
expected to be available for use by an entity; or the
number of production or similar units expected to be
obtained from the asset by an entity.
• In the case of conflict, the GAM or other COA issuances
shall prevail.
Date Acquired/Recognition
This is the date when the asset is available for use, and the depreciation
starts. Generally, for infrastructure assets, the acquisition date must be
the actual date of project completion based upon the Certificate of
Completion.

In the initial recognition of infrastructure assets, the acquisition

date is taken from the year-end of the “year_last_surfacing” or
“reconstruction year” columns from the data structure of the RBIA,
whichever comes later. Since the RBIA usually only has Year, the date
utilized is “12/31/” and year indicated/available in RBIA data.

For the subsequent recognition of infrastructure assets, the

acquisition date for roads shall be the actual date of completion of the
road projects based on the Certificate of Completion.
Table of Estimates
Table of Estimates
Important Consideration: After Initial
Recognition
• After the initial recognition in December, 2015 for projects completed as of
December 31, 2014, accumulated annual depreciation for CY 2015 using
the above methods was also recognized. The pro-forma accounting entries
for therecognition of annual depreciation in CY

• For subsequent completed projects, the annual depreciation shall be

computed by dividing the Acquisition Cost (Actual Disbursements of the
project) by the Estimated Useful Life of the infrastructure asset.

• Starting January 1, 2016 and onwards, depreciation expense is setup every

Starting January 1, 2016 and onwards, depreciation expense is setup every
month using the above method and the pro-forma accounting entries to
record the monthly depreciation of Infrastructure Assets
Important Consideration: Initial
Recognition
• In the initial recognition during December 2015,
for projects completed as of December 31,
2014 and prior years, the Accumulated
Depreciation for Road Infrastructure was
arrived at by dividing the Acquisition Cost
based on the estimate as explained above, by
the estimated useful life, multiplied by the
number of expired years from the date of
acquisition up to December 31, 2014.
Table of Estimated Useful Life
Standard Cost Estimate for Rehabilitation and
Reconstruction (DPWH)
Periodic Reconciliation
Periodic Reconciliation
Periodic Reconciliation