| Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method. Leased assets are depreciated over the shorter of the lease term and their useful lives.
Depreciation is provided on the following basis:
Motor vehicles Over the estimated holding period*
*In assessing depreciation, management estimates the holding period of the motor vehicles and references external industry standard sources to determine the future residual values. The motor vehicles are depreciated on a straight-line basis to this residual value forecast. When the residual value exceeds the carrying value a de minimus £15 per month charge is recognised.
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
The Company disposes of used vehicles through wholesale markets. At the time of disposal, any differences between proceeds received and net book values are recorded as adjustments to cost of sales. |