Page 56 - RFU Annual Report 2017

54
Financial Statements

Notes to the Financial Statements continued

2. Accounting policies continued Land and buildings 40-50 years Depreciation is charged from the
date that the asset is available for use.
(h) Intangible fixed assets and Long-term leasehold over the period This is deemed to be when a practical
amortisation property of the lease completion handover document from
Intangible fixed assets are initially the supplier has been signed by the
recognised at cost. After recognition, Fixtures, fittings 3-40 years RFDL. At this point the asset ceases to
under the cost model, intangible fixed and equipment be an “Asset under Construction” and
assets are measured at cost less any is transferred to the asset class “Land
accumulated amortisation and any Assets held under over the period and buildings”.
accumulated impairment losses. finance leases of the lease
(j) Finance leases
All intangible fixed assets are Depreciation commences when the Assets held under finance leases, which
considered to have a finite useful life. asset is first brought into use. The confer rights and obligations similar
If a reliable estimate of the useful life carrying values of tangible fixed assets to those attached to ownership, are
cannot be made, the useful life shall are reviewed for impairment when recognised at their fair value at the
not exceed five years. Amortisation events or changes in circumstances inception of the lease. Depreciation is
is provided to write off the cost of the indicate the carrying amount may not recognised to write off this amount on
assets on a systematic basis over their be recoverable. Freehold land is not a straight-line basis over the shorter
estimated useful lives on a straight-line depreciated. of the lease term and the useful life
basis as follows: of the asset. Lease payments made
Artificial Grass Pitch (AGP) Project are apportioned between the finance
Computer software 3-5 years The Rugby Football Development charge and a reduction of the capital
Limited (RFDL) entity has developed outstanding so that the interest
Amortisation commences when the a national facilities strategy to deliver charge for each accounting period is
asset is first brought into use. The 60 AGP’s to the grassroots of the game a constant percentage of the capital
carrying values are reviewed for over the next four years. sum outstanding.
impairment when events or changes
in circumstances indicate the carrying The RFDL is a consolidated subsidiary (k) Loans to clubs
amount may not be recoverable. of the RFU and hence these items form Loans to clubs are recorded at cost
part of the RFU Group accounts. in the Balance Sheet. They each
(i) Tangible fixed assets and have their own individual terms
depreciation The AGP project is a capital investment and conditions and are advanced to
Tangible fixed assets are stated and each pitch will be owned and member clubs by the Rugby Football
at original cost less accumulated managed by the RFDL, with the RFU Foundation, and by the RFU under the
depreciation and any provision Group leasing a land site for 30 years RFU club improvement scheme. They
for impairment in value. Such cost from the selected clubs on which it will are secured by either mortgages or
includes costs directly attributable to build the pitches. personal guarantees and are interest
making the asset capable of operating free. These loans are accounted for as
as intended. In the case of major The pitches consist of two layers: the concessionary items in accordance with
stadium work, which has been financed base layer, which has a useful economic section 34 of the public benefit entity
by borrowing, cost includes related life of 30 years, and the top layer, which guidance contained within FRS102.
interest capitalised for the period up to has a useful economic life of 10 years.
the completion of the stadium project. The layers of the pitches are therefore
Depreciation is provided to write off capitalised as separate assets and
the cost of the assets on a systematic depreciated using the straight line
basis over their estimated useful lives method over their respective
on a straight-line basis as follows: economic lives.

Annual Report 2017