AASB 116 - Property, Plant and Equipment - August 2015

What this legislation does:

This is AASB 116, an Australian accounting standard that tells businesses and organisations how to account for property, plant and equipment — basically, the physical stuff they own like buildings, machinery, vehicles, and equipment.

Key things it covers:

• When to recognise assets: You only record something as an asset if it's likely to bring future economic benefits and you can reliably measure its cost.
• How to measure cost: It spells out what counts as part of the purchase price — including purchase price, import duties, delivery, installation, and even future costs of dismantling the asset.
• Two ways to value assets after purchase:
  • Cost model: Keep it on the books at original cost minus depreciation and any impairment losses.
  • Revaluation model: Regularly update the value to fair market value (but you must do this for entire classes of assets, not cherry-pick individual items).
• Depreciation rules: You must spread the cost of the asset over its useful life, reflecting how the asset is actually consumed. Land generally isn't depreciated, but buildings are.
• What happens when you sell or scrap it: Rules for removing assets from the books (derecognition) and calculating gains or losses.