Subsequent

Measurement
 Learning Objective

At the end of the session, the

participants will be able to learn and
apply the measurement and
recognition of costs incurred in the
rehabilitation, repair and maintenance
of local road network in accordance
with PPSAS 17.
 Sessions Overview

 Accounting policies and procedures on

recognition, measurement, de-recognition
and recording of subsequent costs of Road
Network and its components.
 Depreciation and Impairment of Local Road
Networks
 Subsequent Costs

 costs of labor, materials and other

expenses incurred for the
maintenance, repair and rehabilitation
or improvement of local road network
and its components.
 Road Network
Subsequent Costs

• Repairs and Maintenance

• Improvement/Betterments
 Repairs and Maintenance

• necessary for the upkeep of the road

network system to keep the road in good
condition over its economic life.
 Routine maintenance
 Periodic maintenance
 Emergency maintenance
 Subsequent Cost

• improve functionality or replace portion

of the road network system.
 Rehabilitation
 Road Improvement
 Road Upgrading
 Exercise 3.1

Indicate the type of work intervention on the

given scope of work:
 Repairs and Maintenance
 Road rehabilitation
 Road improvement
 Road upgrading
 Exercise 3.1

1. Shoulder repair
 Exercise 3.1

1. Shoulder repair
- Repairs and maintenance
 Exercise 3.1

1. Shoulder repair
- Repairs and maintenance
2. Restoration of deteriorated embankment
 Exercise 3.1

1. Shoulder repair
- Repairs and maintenance
2. Restoration of deteriorated embankment
- Road rehabilitation
 Exercise 3.1

1. Shoulder repair
- Repairs and maintenance
2. Restoration of deteriorated embankment
- Road rehabilitation
3. Replacement of deteriorated drainage
 Exercise 3.1

1. Shoulder repair
- Repairs and maintenance
2. Restoration of deteriorated embankment
- Road rehabilitation
3. Replacement of deteriorated drainage
- Road rehabilitation
 Exercise 3.1

1. Shoulder repair
- Repairs and maintenance
2. Restoration of deteriorated embankment
- Road rehabilitation
3. Replacement of deteriorated drainage
- Road rehabilitation
4. Gravel resurfacing
 Exercise 3.1

1. Shoulder repair
- Repairs and maintenance
2. Restoration of deteriorated embankment
- Road rehabilitation
3. Replacement of deteriorated drainage
- Road rehabilitation
4. Gravel resurfacing
- Repairs and maintenance
 Exercise 3.1

5. Drainage clearing
 Exercise 3.1

5. Drainage clearing
- Repairs and maintenance
 Exercise 3.1

5. Drainage clearing
- Repairs and maintenance
6. Painting of pavement marking
 Exercise 3.1

5. Drainage clearing
- Repairs and maintenance
6. Painting of pavement marking
- Repairs and maintenance
 Exercise 3.1

5. Drainage clearing
- Repairs and maintenance
6. Painting of pavement marking
- Repairs and maintenance
7. Asphalt overlay (Bituminous prime of entire whole
section)
 Exercise 3.1

5. Drainage clearing
- Repairs and maintenance
6. Painting of pavement marking
- Repairs and maintenance
7. Asphalt overlay (Bituminous prime of entire whole
section)
- Road rehabilitation
 Exercise 3.1

5. Drainage clearing
- Repairs and maintenance
6. Painting of pavement marking
- Repairs and maintenance
7. Asphalt overlay (Bituminous prime of entire whole
section)
- Road rehabilitation
 Exercise 3.1

5. Drainage clearing
- Repairs and maintenance
6. Painting of pavement marking
- Repairs and maintenance
7. Asphalt overlay (Bituminous prime of entire whole
section)
- Road rehabilitation
8. Road extension/road widening
 Exercise 3.1

5. Drainage clearing
- Repairs and maintenance
6. Painting of pavement marking
- Repairs and maintenance
7. Asphalt overlay (Bituminous prime of entire whole
section)
- Road rehabilitation
8. Road extension/road widening
- Road upgrading/ improvement
 Exercise 3.1

9. Restoration of gravel pavement

 Exercise 3.1

9. Restoration of gravel pavement

- Repairs and maintenance
 Exercise 3.1

9. Restoration of gravel pavement

- Repairs and maintenance
10. Concrete re-blocking
 Exercise 3.1

9. Restoration of gravel pavement

- Repairs and maintenance
10. Concrete re-blocking
- Road rehabilitation
 Exercise 3.1

9. Restoration of gravel pavement

- Repairs and maintenance
10. Concrete re-blocking
- Road rehabilitation
11. Major slope protection
 Exercise 3.1

9. Restoration of gravel pavement

- Repairs and maintenance
10. Concrete re-blocking
- Road rehabilitation
11. Major slope protection
- Road upgrading
 Exercise 3.1

9. Restoration of gravel pavement

- Repairs and maintenance
10. Concrete re-blocking
- Road rehabilitation
11. Major slope protection
- Road upgrading
12. Widening or improvement of existing local roads
 Exercise 3.1

9. Restoration of gravel pavement

- Repairs and maintenance
10. Concrete re-blocking
- Road rehabilitation
11. Major slope protection
- Road upgrading
12. Widening or improvement of existing local roads
- Road improvement
 Exercise 3.1

13. Crack and joint sealing of concrete pavements

 Exercise 3.1

13. Crack and joint sealing of concrete pavements

- Repairs and maintenance
 Exercise 3.1

13. Crack and joint sealing of concrete pavements

- Repairs and maintenance
14. Vegetation control
 Exercise 3.1

13. Crack and joint sealing of concrete pavements

- Repairs and maintenance
14. Vegetation control
- Repairs and maintenance
 Exercise 3.1

13. Crack and joint sealing of concrete pavements

- Repairs and maintenance
14. Vegetation control
- Repairs and maintenance
15. Geometric design improvement
 Exercise 3.1

13. Crack and joint sealing of concrete pavements

- Repairs and maintenance
14. Vegetation control
- Repairs and maintenance
15. Geometric design improvement
- Road Improvement
 Accounting Policies

• Road repairs and maintenance

o directly charged to expense
accounts
 Accounts

Account Description
Repairs and This account is used to record the cost of repairs and
Maintenance – maintenance on road networks; sewer systems; water
Infrastructure Assets supply systems; power supply systems;
communication networks; seaport systems; airport
5-02-13-030 systems; parks, plazas, monuments; and other
infrastructure assets.

Subsidiary ledger: 01 - Road Networks

 Accounting Policies

• Road Betterments/Replacements
– Will result in an increase of future
economic benefits and will extend the
road network useful life.
– Capitalized or added to the carrying
amount of the road network
component and shall be depreciated
over the remaining life of the asset.
 Accounts

Account title/ Account Description

(Code)

Road Networks • This account is used to record the cost incurred in the
purchase or construction or fair value, if acquired
1-07-03-010
through donation or transfers without cost, of roads,
highways and bridges, railways, subways, and other road
network facilities such as footbridge, traffic lights and
road signage for public use.
• Credit this account for the de-recognition of the carrying
amount of the replaced portion.
• Subsidiary ledgers shall be maintained for each road and
each component of the road.
 Depreciation

 Systematic allocation of the

cost of a road network over
its useful life.
 Depreciation – Road Network

 Factors in determining depreciation

 Cost
 Useful Life
 Depreciation – Road Network

 Useful Life
– is the period over which a road
network is expected to be
available for use by an LGU.
 Depreciation – Road Network

 Factors in determining Useful Life

 Design
 Users
 Volume/types of Users
 Depreciation – Road Network

 Useful Life
Road Network Component Est. Useful Life
Road Pavement:
Concrete 20
Asphalt 10
Drainage and Slope Protection 10
Shoulders & other structures 10
Other Miscellaneous
5
Structures
 Depreciation – Road Network

 Computation:
 Straight line method
 Cost/Useful Life
 Depreciation – Road Network

 Accounting Policies
 No residual value shall be
provided for the depreciable
component of the road network
system.
 Depreciation – Road Network

 Accounting Policies
 Road lot component shall not be
subject to depreciation.
 Road network components shall
be depreciated separately
 Depreciation – Road Network

 Accounting Policies
 Depreciation shall be recognized
on the current month if the local
road network is completed and
available for use on or before
the 15th of the month
 Depreciation – Road Network

 Accounting Policies
 Depreciation shall be recognized
on the succeeding month if the
local road network is completed
and available for use on or after
the 15th of the month
 Depreciation – Road Network

 Accounting Policies
 Depreciation ceases when the
local road network component is
derecognized.
 Depreciation – Road Network

 Accounting Policies
 For pavement treatments, the
original road asset shall remain
and be depreciated separately.
 Exercise 3.2

1. Province A constructed a new five km. – 30,000 square

meters road (stn. 1 – stn. 5) from Barangay Duterte to
Barangay Robredo in 2018. The total cost is
P15,000,000.00 and the cost components are:
Particulars Estimated Useful Life Cost
Road Lot P2,000,000.00
Asphalt Pavement 10 12,000,000.00
Drainage 10 1,500,000.00
Shoulders 10 1,500,000.00
Total P17,000,000.00
 Exercise 3.2

2. The road project was certified as completed on March

20, 2018 per Certificate of Completion dated March 20,
2018 and was assigned Road ID No. 1235.

3. In August 2019, due to typhoon Sarah one km. (6,000

sq. meters) of the road pavement was damaged
including the drainage and part of the Shoulder. The
province spent P250,000.00 for asphalt patching,
P125,000.00 to repair the damaged drainage and
P125,000.00 for Shoulder repair.
 Exercise 3.2

Required:

1. Compute the total depreciation of the Duterte-

Robredo road network for the year ending
December 2018.
 Exercise 3.2

Depreciation of the Duterte-Robredo road network for

2015
Particulars Est. Useful Cost Depreciation/
Life month
Pavement 10 12,000,000.00 P 100,000.00

Drainage 10 1,500,000.00 12,500.00

Shoulders 10 1,500,000.00 12,500.00

Total P17,000,000.00 P 125,000.00

Depreciation for 2018 (P125,000.00 x 9 P1,125,000.00

months, April to Dec.)
 Exercise 3.2

Required:

2. Compute the accumulated depreciation of each

road component of the road network as of
December 31, 2020.
 Exercise 3.2

Accumulated depreciation of each road component as

of December 31, 2020:
Depreciation Accumulated
Particu- Depreciation as
lars 2018 (9 mos.) 2019 2020 of 12/31/2020

P900,000.00 P 1,200,000.00 P 1,200,000.00 P 3,300,000.00

Pavement
Drainage 112,500.00 150,000.00 150,000.00 412,500.00

112,500.00 150,000.00 150,000.00 412,500.00

Shoulders
Total P 1,125,000.00 P 1,500,000.00 P 1,500,000.00 P 4,125,000.00
 Impairment

 is the amount by which the

road network is physically
damaged and can no longer be
used for its intended purpose.
 Impairment – Road Network

 Accounting Policies
 Components of the road
network shall be regularly
assessed for impairment.
 Impairment – Road Network

 Accounting Policies
 The impairment loss shall be
recognized as an expense in the
financial statements.
 Impairment – Road Network

 Accounting Policies
 The impairment loss recognized
in prior periods shall be reversed
if the reasons for recognizing the
impairment loss no longer
exists.
 Replacement Costs

 Accounting Policies
 Replacement or betterments of
parts of the road network system
shall be recognized in the
carrying amount of roads.
 Replacement Costs

 Accounting Policies
 The carrying amount of the
components of the local road
network replaced shall be
derecognized.
 Replacement Costs

 Accounting Policies
 The replacement costs of local
road network components will
be depreciated over the
remaining useful life of the road
network components.
 Replacement Costs

 Carrying amount
 is the amount at which an asset is
recognized after deducting any
accumulated depreciation and
accumulated impairment losses.
 Exercise 3.3

Additional Information (from Exercise 3.2):

1. Due to frequent typhoons and because of the unexpected
volume of users and allowing eight- wheeler trucks to use
the road, Province A decided to upgrade portion of the
road network by replacing the asphalt pavement of
station 1 to concrete pavement. In the 3rd quarter of
2021, the province awarded the project to C Construction
for the concreting of one km. or 6,000 sq.m of the road
pavement of station 1 with a total cost of P2,400,000.00.
The project was certified as completed on October 10,
2021 per Certificate of Completion dated October 15,
2021. The estimated life of the concrete pavement is 20
years.
 Exercise 3.3

Additional Information (from Exercise 3.2):

2. Also, on the same period, the province decided to award

the asphalt overlay (bituminous prime or tack coat) of
Stn. 2 (6,000 sq.m) to D Construction for P1,500,000.00.
The project work was completed on October 15, 2021 per
Certificate of Completion dated October 20, 2021. The
estimated life of the asphalt overlay is five (5) years
 Exercise 3.3

Required:

1. Determine the total replacement cost of the

pavement.
 Exercise 3.3

The total replacement cost of the pavement.

Particulars Cost
Concrete Pavement (Station 1) 2,400,000.00
Asphalt Pavement (Station 2) 1,500,000.00
Total 3,900,000.00
 Exercise 3.3

Required:

2. Determine the value of the road network that

will be de-recognized as of September 30,
2021.
 Exercise 3.3

Value of the road component that will be de-

recognized as of Sept. 30, 2021:
Accumulated
Particulars Cost
Depreciation
Pavement
2,400,000.00 840,000.00
(Station 1)
Pavement
2,400,000.00 840,000.00
(Station 2)
Total 4,800,000.00 1,680,000.00
 Exercise 3.3

Required:

3. Compute the amount of depreciation of the

pavement for the month of October 2021.
 Exercise 3.3

Depreciation of the pavement for the month of October

2021:
Est.
Original Cost/ Depreciation
Particulars Usef
Carrying Amount as for October
ul
of Oct. 2021
Life
Concrete Pavement (Stn. 1) 20 2,400,000.00 10,000.00

Asphalt Pavement (Stn. 2) 5 1,500,000.00 25,000.00

Asphalt Pavement (3-5) 10 7,200,000.00* 60,000.00

Total P95,000.00
 Exercise 3.3

Note:
1. The concrete pavement at Station 1 is carried in the
books at cost with an estimated life of 20 years.
2. The asphalt overlay at Station 2 of P1,500,000.00 is
depreciated over its estimated life of five (5) years.
3. Asphalt pavement of Stations 3 to Station 5 (Original
cost less amount de-recognized or P12,000,000.00 – P
4,800,000.00 = P7,200,000.00)*
4. Depreciation for the newly rehabilitated pavements
starts in October since the projects were completed
before the 15th of the month of October.
 Summary

Subsequent costs incurred:

 Regular maintenance and upkeep of the local road
network;
 Replacements/betterments of the local road
network

Depreciation and impairment

Recording subsequent costs