OPPapers.com

Accountin For Asset

Demolition Costs– New Policy• Demolition costs included in cost of new buildings as site preparation only where– No legal or constructive obligation to restore – Formal management commitment to demolish and build on the site • Demolition costs expensed where no intention to rebuild on the site
--------------------------------------------------------------------------------
Page 17
Subsequent Expenditure• Major replacements and regular major inspections (which are a condition of continued operation) are capitalised (AASB 116 paras 13-14)• Repairs and maintenance are expensed as is day to day servicing (AASB 116 para 12)
--------------------------------------------------------------------------------
Page 18
VALUATION
--------------------------------------------------------------------------------
Page 19
Cost vs Valuation – AASB 116 (para 29) allows (by class) use of either– Cost model or – Valuation model • Non-Current Asset Policies override – mandate the valuation model all physical assets – Plant and equipment and WIP exceptions
--------------------------------------------------------------------------------
Page 20
• Cost model – carried at cost less accumulated depreciation less impairment losses (AASB 116 para 30)• Valuation model – revalued amounts less accumulated depreciation less impairment losses – regular revaluation (AASB 116 para 31)
--------------------------------------------------------------------------------
Page 21
Fair Value• Fair value definitionthe amount for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction • If an item is revalued, the entire class shall be revalued (AASB 116 para 36)
--------------------------------------------------------------------------------
Page 22
Accounting for Revaluations• Increments taken to the asset revaluation reserve (equity), except where they reverse a previous decrement recognised in profit or loss, they are taken to profit or...