8.37 The disposal of land in exchange for a long-term reduction in service payments creates a debtor in the NHSScotland body's accounts. This is because the benefit of placing the land in the deal is realised over a future period and effectively constitutes a prepayment. The debtor asset should be created at the point at which the scheme reaches financial close, i.e. when the transfer of economic benefit becomes reasonably certain.
8.38 The value of the debtor is equivalent to the economic benefit obtained from including land in the PPP deal, i.e. the NPV of the reduction in the value of the annual service payment when discounted at 3.5% (real). This initially would be the underwritten value (guaranteed minimum price) but may change as a result of overage arrangements. Debtors should not be indexed over the life of the contract where the prepayment is a fixed monetary amount, not linked to inflation.
8.39 The debtor should be treated as a prepayment within current assets in the NHSScotland body's financial statements. The amount due after more than one year must be separately disclosed in the accounts in order to meet the requirements of Urgent Issues Task Force Abstract 4.