Depreciation of Plant, Property and Equipment under AASB 116 - Desklib
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This report discusses the depreciation of Plant, Property and Equipment under AASB 116 and its implications. It also includes an analysis of Sea Eagle Ltd. by the auditing team. The report concludes with a summary of the key findings.
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Contents INTRODUCTION..........................................................................................................................3 QUESTION 1...................................................................................................................................3 1. Give a brief summary about the depreciation of the Plant, property and equipment in relation to AASB 116..................................................................................................................3 2. Write a report of an analysis to the supervisor of the Seal Eagle Ltd. by giving the views of accountant considering that you are in the auditing team...........................................................4 CONCLUSION...............................................................................................................................5 REFERENCES................................................................................................................................6
INTRODUCTION The Australian Accounting Standards Board (AASB) are the policies which are set for the government and private organisation and are mandatory for them to follow these standards. The AASB 16 issued for the policies related to the leasing of the assets and the liabilities for recognising the lease amount which are of more than 12 months. In this the depreciation which should be charged on the idle time period of the assets or not is discussed at the procedures and policies used in AASB 116 in relation to the PPE depreciation(Hasanudin, 2018). The report discusses about the strike of the Sea Eagle which influences the ample number of plants. So, the repost demands about the PPE depreciation which is imposed under AASB 16. Further, the analysis is performed on the Sea Eagle Ltd by the auditing team. QUESTION 1 1. Give a brief summary about the depreciation of the Plant, property and equipment in relation to AASB 116. The plant, equipment and the machinery (PPE) is used for the supply of the product and the services in production for the purpose of the administrative work. These are the tangible assets which are estimated to be utilised for a period of more than 1 year. The cost of these assets are determined comprising the purchase price and the taxes which are imposed on the items after the deduction of the rebated and other discounts. The AASB 116 gives the permission for the revaluation of the models for measuring the correct amount of the PPE after the initial amount is recognised and is done through the cost model. The implications which can incur in the disclosure of the AASB 116 will revalue those assets will be held for the purpose of sale in the future period. The financial statement discloses the amount for each of the PPEs – The depreciation method is selected and then the life of the assets is estimate and the depreciable amount is computed(Prasad, 2018).That is the reason, the rates which imply on the assets for the calculation of depreciation is necessary. The depreciation is the amount which is deducted from the asset considering its useful life. It is allocated to the cost of the useful period.
The asset used in the term reflect the appropriate use of the value of asset. It will depreciate the correct amount and the waste of the asset’s value be also not being done. According to the case study of the Sea Eagle Ltd. Specialized or occupational outdated businesses can incur the monetary benefits which are consumed through the use of the assets. It is wear and tear when the resources stays inactive. This frequently bring about the decrease of the financial advantages that may have been gotten from the assets(Rajapakse and Senarath, 2019). Subsequently, every one of the accompanying elements are considered in deciding the helpful existence of a resource: Normal use of the resource. Its use is evaluated by reference to the resource's normal limit or actual result. Expected wear and tear of the assets: It relies upon functional factors, for example, the quantity of movements for which the resource is to be utilized and the maintenance and support program, and the consideration and upkeep of the resource while inactive (Zdrowomyslaw, 2018). Technical obsolescence:emerging from changes or upgrades underway, or from an adjustment of the market interest for the item or administration result of the resource. Thus, it can be said that the depreciation will be charge on the idle time of the asset, irrespective of the physical use of asset. 2. Write a report of an analysis to the supervisor of the Seal Eagle Ltd. by giving the views of accountant considering that you are in the auditing team. Accordingly, from the above it can be analysed that the depreciation on the asset does not stop when the resource becomes inactive or is resigned from dynamic utilization except if the resource is completely devalued. Though, under use techniques for depreciation the devaluation charge can be zero, when the is full amount of depreciation charged. According to the AASB 116, The use of the asset might influence the estimated life of the asset. Assuming that a strike was long sufficient it might change the normal valuable of PPE. In any case, this may likewise affect anticipated lingering esteem(Johnson, 2018). All in, not set in stone the strategy for depreciation. For example; straight-line, the valuation of the variables in that computation will be impacted by financial incidents like strikes. The presence of a monetary events for instance will be influenced by the strike which does not mean postponement of the
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process of allocation. The capacity of depreciation is not an essential for a matching cycle. The evaluation of it is not a part of the revenue which is gained in the specific year. CONCLUSION From the above mentioned report, it can be summarised that the AASB is an asset of the norms related to the accounting policies. In this the case study in context to the Sea Eagle Ltd. is gives and the situation of not using the PPE assets in the time of assets is discussed. Through this a confusion regarding the matching of the expenses of depreciation is created. The repost demands the AASB 116 abridges with the reference to the depreciation of the PPE assets. Further, the analysis is done imaging that the auditing teams has prepared a report consisting about the factors that has been interpreted from the financial statement of the Sea Eagle Ltd.
REFERENCES Books and Journals Hasanudin, A.I., 2018.Teori Akuntansi. CV MARKUMI. Johnson, G., 2018.An Investigation into Why Not All Net Operating Losses Reported are Net Operating Losses(Doctoral dissertation, Northcentral University). Prasad,A.,2018.EnvironmentalPerformanceAuditinginthePublicSector:Enabling Sustainable Development. Routledge. Rajapakse, P. and Senarath,S., 2019.CommercialLawAspectsof ResidentialMortgage Securitisation in Australia. Springer. Zdrowomyslaw, N., 2018. KAPITEL V: BEDEUTUNG UND ENTWICKLUNG IN DER INTERNATIONALENRECHNUNGSLEGUNG.InJahresabschlussund Jahresabschlussanalyse(pp. 190-270). Oldenbourg Wissenschaftsverlag.