Depreciation of Plant, Property and Equipment under AASB 116 - Desklib

ACC201

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.