Accounting policies and estimates to measure Property, Plant and Equipment

STUDENT NAME:
STUDENT NUMBER:
COMPANY NAME: ORIGIN ENERGY LIMITED
ANNUAL REPORT YEAR: FINANCIAL YEAR ENDED 30TH JUNE, 2019
LECTURER NAME:
CLASS TIME:
WORD COUNT:

Contents
Executive summary:................................................................................................... 3
Background:............................................................................................................... 4
Accounting policies and estimates to measure Property, Plant and Equipment.........4
Useful lives of assets:.............................................................................................. 4
Impairment testing:................................................................................................. 5
Is professional judgement appropriate?.....................................................................5
Does the Disclosures reflect qualitative characteristics of financial information?......6
References:................................................................................................................ 8
Appendix.................................................................................................................... 9

Executive summary:
The report provides an understanding of the estimates and judgements used by the management
of Origin Energy Ltd. in relation to the Property, Plant and Equipment of the company. It also
provides a comparison of the judgements, so made with the judgements made by a company
from similar industry, i.e. Beach Energy Limited.
The report also provides an understanding on the adherence to the disclosure requirement
provided by Conceptual Framework of AASB, which provides specific guidance as to the
disclosure on qualitative characteristic of the information in the financial statements.
Based on the analysis performed on the financial statements of Origin Energy Limited and a
comparison of the same with the information provided in the financial statements of Beach
Energy Limited, it can be reasonably concluded that the judgements made by the management
are reasonable.
Further, disclosure requirements, as stated in the conceptual framework for accounting standards,
issued by AASB have been adhered to.

Background:
We have selected Origin Energy Limited as the company, for doing the required analysis around
accounting policies and estimates used to measure Property, Plant and equipment for the
financial year 2019.
As per the annual report of Origin Energy limited for 2019, the company has prepared the
financial statements in conformity with AASBs. In the preparation of financial statements, the
management of the company is expected to make various assumptions an estimate, the
assumptions which the management make, are based on past experience of the management and
certain other factors, which are believed to be relevant for making the assumptions. Since
estimates are predictions, based on past experiences, the actual results in the future, may be very
different from the estimates of the management.
Accounting policies and estimates to measure Property,
Plant and Equipment
Useful lives of assets:
The company uses straight line method of depreciation for its asset. It has
estimated the useful life for each category of the assets, for buildings the estimated
life is in the range of 10-50 years, depending on the type of building and purpose
for which it is being used. And for plant and equipment, the life is estimated to be
between 3 to 30 years, again depending on the type of equipment. (Origin Energy
Limited, 2019 Annual report)
Above mentioned estimation of useful life of the assets directly impacts the
depreciation expense of the company, thereby impacting the profits reported by the
company. Estimation of useful life requires a judgement from the management,
which is based on their past experience with specific category of assets being used
by the company and it is also based on the guidance given by AASB for each
category of assets.