What is Semi-Expendable Property?

What is considered as semi-expendable property?

Semi-expendable properties are tangible items which meet the definition and recognition criteria of Property, Plant and Equipment (PPE), but below the capitalization threshold of ₱50,000.00.

Capitalization Threshold refers to the monetary value at which an entity elects to capitalize tangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period. 

Tangible items are identifiable non-monetary assets with physical substance. 

Section 23 of the General Provisions of RA No. 11639 or the FY 2022 GAA provides that tangible items [with amount] below ₱50,000.00 shall be accounted as semi-expendable property.

COA Circular No. 2022-004 dated May 31, 2022

Recognition Criteria for Property Plant and Equipment (PPE)

According to the Commission on Audit (COA), a tangible item shall be recognized as property, plant and equipment (PPE) if it meets the following criteria:

PPE are tangible items that are:

a. Purchased, constructed, developed or otherwise acquired;

b. Held for use in the production or supply of goods and services or to produce program outputs;

c. For rental to others (other than investment property);

d. For administrative purposes;

e. Expected to be used during more than one reporting period; and

f. Not intended for resale in the ordinary course of operations.

COA Circular No. 2020-006 dated January 31, 2020

The cost of an item of PPE shall be recognized as asset if and only if:

a. It is probable that the future economic benefits or service potential associated with the item will flow to the entity;

b. The cost or fair value of the item can be measured reliably;

c. Beneficial ownership and control clearly rests with the government;

d. The asset is used to achieve government objectives; and

e. It meets the prescribed capitalization threshold.

COA Circular No. 2020-006 dated January 31, 2020