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Valuation of Assets

FAO: Treasurer, Company Secretary, any council members involved in the acquisition or disposal of assets.

Middleton Railway Trust Ltd. (MRT) Policy Directive

Reference: FIN/2 (6/95) Subject: Valuation of Assets.

For the attention of: Treasurer, Company Secretary, any Council members involved in the acquisition or disposal of assets.

For the information of: the MRT’s auditors.

This Directive does not form part of the Safety Management System.

Revision History

Previous versions of this Directive were as follows. Reference 6/95/1 was the initial version.

This version implemented the revised numbering scheme for directives, but made no other changes to the content.

Content Summary

This Directive contains the following sections: Introduction

Revaluation of Assets Valuation of Buildings Valuation of Rolling Stock Valuation of Track

Valuation of Tools and Spares

Introduction

  1. A revaluation of the MRT's capital assets will be carried out during the financial year ending 31st December 1995. The new values will be applied during the course of that financial year, and the changes in valuation will be shown as an extraordinary item in the MRT's accounts for that financial year.
  • As a consequence of the revaluation, depreciation will in future be charged on certain classes of capital assets. This charging of depreciation will be applied initially during the financial year ending 31st December 1995, with the charges to be assessed as though the new values had been applied on 1st January 1995.
  • The following policies will be adopted for the valuation or revaluation of the MRT's capital assets, and for the charging of depreciation on capital assets.
  • Where nominal values need to be determined for capital assets, the basis of these values must be approved by the Council, and must then be reviewed every five years in the light of changes in underlying market values.

Revaluation of Assets

  • Any changes in the values of assets due to the revaluation will be represented in the accounts by the creation of a revaluation reserve.
  • The values of the existing ticket office and engine shed buildings will not be altered, but the new engine shed will be revalued on the basis defined in clause 11 below.
  • Rolling stock will be revalued on the basis defined in clauses 14 to 16 below.
  • Rail will not be revalued.
  • Sleepers will be revalued on the basis defined in clauses 23 to 25 below.
  1. The stock of tools and spares will be revalued on the basis defined in clauses 27 to 30 below.

Valuation of Buildings

  1. Buildings will be valued on the basis of their construction cost. For any new buildings an estimate of the volunteer labour costs will be made by the Council and will be included in the valuation, and will be represented by the revaluation reserve.
  1. Significant maintenance and other building work will be capitalised.
  1. The values of the buildings will be depreciated on a straight line basis at 2.5% per annum.

Valuation of Rolling Stock

  1. Items of rolling stock will be valued at their nominal scrap value.
  1. Any item of rolling stock acquired at a cost that exceeds the nominal scrap value by more than 25% will be written down to this value in a straight line over 10 years.
  1. Any item of rolling stock acquired at less than the nominal scrap value will be written up to this value immediately, and the increase will be treated as a donation from the suppliers and will be shown as such in the company's accounts.
  1. Any paper profit or loss on any item of rolling stock that is disposed of will be treated as a separately identified item in the company's accounts.
  1. Values of items of rolling stock will not be depreciated or appreciated, other than as in clauses 15 or 16 above, or as a result of the reviews made as in clause 4 above.
  1. All costs of rolling stock maintenance will be written off as incurred.

Valuation of Track

  • Rail will be valued at its nominal scrap value.
  • Acquisitions, disposals and depreciation of rail will be treated as for items of rolling stock, as specified in clauses 15 to 18 above.
  • Where new rail is acquired it will be written down over 20 years, instead of the 10 years that is specified in clause 15 above.
  • Sleepers will be valued on the basis of the nominal current market price for serviceable second-hand material.
  • Sleepers that are acquired or disposed of will be capitalised at cost.
  • Values of sleepers will be depreciated on a straight line basis at 4% per annum.
  • Costs of ballast and any other site works will be written off as incurred.

Valuation of Tools and Spares

  • Small tools and spares will be treated as a pool of assets that is subject to wastage.
  • All purchases of small tools and spares will be capitalised at cost.
  • The stock of small tools and spares will be valued at each year end, and the wastage charged as depreciation for the year.
  • Large tools and similar equipment will be treated as for items of rolling stock, as in clauses 14 to 19 above.

Drafted by S H Holdsworth and A J Cowling, and approved on 20th June 1995.