Jersey Car Parks: Non Cash Depreciation Budget

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A decision made on 15 October 2010 regarding non cash depreciation budget for Jersey car parks

Decision Reference: MD-T-2010-0099
Decision Summary Title :	Non Cash (GAAP) Depreciation Budget for Jersey Car Parks		Date of Decision Summary:	23 September 2010
Decision Summary Author:	Senior Management Accountant		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Non Cash (GAAP) Depreciation Budget for Jersey Car Parks		Date of Written Report:	23 September 2010
Written Report Author:	Senior Management Accountant		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Non Cash Depreciation Budget for Jersey Car Parks
Decision(s): The Minister approved an increase in the non cash budget transfer of £470,500 under UK Generally Accepted Accounting Principles (GAAP) for Jersey Car Parks.
Reason(s) for Decision: The current full year budget for the depreciation of fixed assets owned by the trading entity “Jersey Car Parks” is £594,000. The method by which the car parks were depreciated were revisited, the outcome of which led to a change in the life of the car parks by which the straight line depreciation method was applied. This in turn resulted in a greater depreciation budget being required than originally budgeted. It is important to note that this is a non cash budget which is required under UK GAAP accounting. The full depreciation budget required for 2010 is £1,064,500, therefore there is a short fall of £470,500.
Resource Implications: There are no other resource implications other than the transfer of non cash budget for Jersey Car Parks depreciation.
Action required: The Finance Director to request the Minister for Treasury and Resources to approve the increase in depreciation budget referred to in this report. Once approval is obtained, the Finance Director required to action the budget transfer.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Jersey Car Parks: Non Cash Depreciation Budget

TRANSPORT AND TECHNICAL SERVICES

NON CASH (GAAP) DEPRECIATION BUDGET FOR JERSEY CAR PARKS

Purpose of the Report

For the Minister to approve and request approval from the Minister for Treasury and Resources to the non cash budget increase of £470,500 to ensure that under UK GAAP accounting Jersey Car Parks has sufficient depreciation budget to cover the annual depreciation of the Jersey Car Park assets.

Background

In 2009 a valuation exercise was carried out on all States of Jersey assets. The estimated life’s of the Jersey Car Parks were set at those of the valuer. Following discussions with the Manager of Jersey Car Parks and the Treasury it was agreed to reduce the estimated life’s of the Jersey Car Parks to reflect the accurate estimated life which resulted in a shortfall of the non cash (GAAP) budget for depreciation.

Discussion

The depreciation budget for the trading entity “Jersey Car Parks” is currently insufficient following a change in the original estimated life of the car parks which was used for valuation purposes. The shortfall of £470,500 is required to ensure sufficient budget is available for the annual depreciation charges and will be apportioned against the individual car parks as follows:

Car Park	Account Number	Required budget £	Current budget £	Difference £
Patriotic Street - MSCP	QYC001.910100.G71	157,475	107,743	49,732
Sand Street - MSCP	QYC002.910100.G71	218,345	148,157	70,188
Minden Place - MSCP	QYC003.910100.G71	179,630	64,150	115,480
Pier Road - MSCP	QYC004.910100.G71	178,060	103,082	74,978
Green Street - MSCP	QYC005.910100.G71	323,335	161,805	161,530
First Tower - MSCP	QYC007.910100.G71	7,655	9,063	(1,408)
Total		1,064,500	594,000	470,500

Recommendation

That the Minister approves the additional non cash (GAAP) budget of £470,500 to ensure that there is sufficient budget to cover the annual depreciation of the Jersey Car Parks resulting from the change in estimated life.

Reason(s) for Decision

The current full year budget for the depreciation of fixed assets owned by the trading entity “Jersey Car Parks” is £594,000. The method by which the car parks were depreciated was revisited, the outcome of which led to a change in the life of the car parks by which the straight line depreciation method was applied. This in turn resulted in a greater depreciation budget being required than originally budgeted. It is important to note that this is a non cash budget which is required under UK GAAP accounting. The full depreciation budget required for 2010 is £1,064,500, therefore there is a short fall of £470,500.

Resource Implications

There are no other resource implications other than the transfer of non cash budget for Jersey Car Parks depreciation.

Action Required

The Finance Director to request the Minister for Treasury and Resources to approve the increase in depreciation budget referred to in this report. Once approval is obtained, the Finance Director is required to action the budget transfer.

Written by:	Senior Management Accountant

Approved by:	Finance Director