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AASB 116 - Property, Plant and Equipment

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Summary 
Developments, Key Differences & History 
Compared to IFRS 
Interpretations 
Rejection Notices 
Questions & Answers 
Articles 
AASB website 

Interpretations relating to AASB 116 Property, Plant and Equipment are listed below: 
  • Interpretation 1 
    Changes in Existing Decommissioning, Restoration and Similar Liabilities 
     
    Operative date: 1 January 2009 
    Issue date: June 2007 
     
    Changes in the measurement of an existing decommissioning, restoration and similar liability that result from changes in the estimated timing or amount of the outflow of resources embodying economic benefits required to settle the obligation, or a change in the discount rate are accounted for as follows:
    • If the related asset is measured at cost, changes are capitalised as part of cost of the asset and depreciated over the remaining useful life.
      •  
    • If the related asset is revalued, changes are recognised in the asset revaluation reserve, similar to other revaluation movements. (NB for not-for-profit entities, this requirement is applied to a class of assets, consistent with AASB 116 Property, Plant & Equipment). 
      The increase in the liability that reflects the passage of time is recognised in profit or loss as a finance cost.
    •  
    Related AASB Standards: AASB 101, AASB 116, AASB 123, AASB 136, AASB 137 
     
  • Interpretation 4 
    Determining whether an Arrangement contains a Lease 
     
    Operative date: 1 January 2008 
    Issue date: February 2007 
     
    Determining whether an arrangement contains a lease is based on the substance of the arrangement and requires assessment of whether:
    • the arrangement depends on the use of a specific asset or assets; and
      •  
    • the arrangement conveys a right to use the asset.
    •  
    Related AASB Standards: AASB 108, AASB 116, AASB 117, AASB 138 
     
  • Interpretation 12 
    Service Concession Arrangements 
     
    Operative date: 1 January 2009 
    Issue date: June 2007 
     
    In a public-to-private service concession arrangement, the operator is required to:
    • Recognise and measure revenue received under the contract in accordance with AASB 118 Revenue and AASB 111 Construction Contracts.
      •  
    • Allocate the consideration received to the different elements (eg construction and maintenance) of the contract, based on each identifiable element’s fair value.
      •  
    • Recognise either:
      • a financial asset, to the extent that the operator has an unconditional right to receive cash or another financial asset; or
        •  
      • an intangible asset, to the extent that the operator receives a right to charge users of the public service.
    •  
    Related AASB Standards: AASB 1, AASB 7, AASB 108, AASB 111, AASB 116, AASB 117, AASB 118, AASB 120, AASB 123, AASB 132, AASB 136, AASB 137, AASB 138, AASB 139 
     
  • Interpretation 113 
    Jointly Controlled Entities – Non-Monetary Contributions by Venturers 
     
    Operative date: 1 July 2007 
    Issue date: July 2007 
     
    Under paragraph 48 of AASB 131 Interests in Joint Ventures, recognition of gains or losses on contributions of non-monetary assets in exchange for an equity interest in the jointly controlled entity (‘JCE’) is appropriate unless: 
    • the significant risks and rewards of ownership of the non-monetary asset are not transferred to the JCE;
      •  
    • the gain or loss cannot be measured reliably; or
      •  
    • the contribution transaction lacks commercial substance.
    • If one of these exceptions applies, the gain or loss is regarded as unrealised, unless a venturer receives monetary or non-monetary assets in addition to the equity interest received.  
     
    Related AASB Standards: AASB 116, AASB 118, AASB 131 
     
  • Interpretation 121 
    Income Taxes – Recovery of Revalued Non-Depreciable Assets 
     
    Operative date: 1 January 2005 
    Issued date: July 2004 
     
    The basis for measuring deferred taxes for a revalued non-depreciable asset is to use the tax rate applicable to the taxable amount derived from the sale of the asset. 
     
    Related AASB Standards: AASB 121, AASB 116, AASB 140
    •  
     
  • Interpretation 129 
    Service Concession Arrangements: Disclosures 
     
    Operative date: 1 January 2008 
    Issued date: February 2007 
     
    This Interpretation provides disclosure requirements for grantors and operators, regarding service concession arrangements. Disclosures include a description of the arrangement and significant terms that may affect the amount, timing and certainty of future cash flows. 
     
    Related AASB Standards: AASB 101, AASB 102, AASB 111, AASB 116, AASB 117, AASB 136, AASB 138
    •  
     
  • Interpretation 132 
    Intangible Assets – Web Site Costs 
     
    Operative date: 1 January 2005 
    Issued date: July 2004 
     
    A web site developed by an entity for its own use is an internally generated intangible asset, however the only costs that can be capitalised are those where it can be demonstrated that future economic benefits will be generated in accordance with AASB 138 Intangible Assets.  
     
    Related AASB Standards: AASB 101, AASB 102, AASB 111, AASB 116, AASB 117, AASB 136, AASB 138
    •  
     
  • Interpretation 1017 
    Developer and Customer Contributions for Connection to a Price-Regulated Network 
     
    Operative date: 1 January 2005 
    Issued date: November 2004 
     
    Developer or customer contributions received to extend or modify a service delivery network so that the developer or customer can obtain access to the network, must be recognised as revenue when the network has been extended or modified. When the contribution is a non-current asset, the revenue is measured at the fair value of the contributed asset at the date on which the recipient obtains control of that asset. 
     
    Related AASB Standards: AASB 116, AASB 118
    •  
     
  • Interpretation 1030 
    Depreciation of Long-Lived Physical Assets: Condition-Based Depreciation and Related Methods 
     
    Operative date: 1 January 2005 
    Issued date: September 2004 
     
    This Interpretation identifies characteristics of condition-based depreciation and related methods that do not satisfy the requirements of AASB 116 Property, Plant and Equipment.  
     
    Related AASB Standards: AASB 116, AASB 137
    •  
     
  • Interpretation 1031 
    Accounting for the Goods and Services Tax (GST) 
     
    Operative date: 1 January 2005 
    Issued date: July 2004 
     
    Cash flows must be included in the cash flow statement on a gross basis, which means inclusive of any applicable GST. Investing and financing cash flows are presented net of the GST recoverable from or payable to the taxation authority. Any applicable GST component relating to investing and financing cash flows is classified in operating cash flows. 
     
    Related AASB Standards: AASB 102, AASB 107, AASB 108, AASB 116, AASB 118, AASB 138
    •  
     
  • Interpretation 1055 
    Accounting for Road Earthworks 
     
    Operative date: 1 January 2005 
    Issued date: September 2004 
     
    Road earthworks must be recognised as assets in accordance with AASB 116 Property, Plant and Equipment. Road earthwork assets that are assessed (by engineering reviews) as not having a limited useful life are not depreciated.  
     
    Related AASB Standards: AASB 108, AASB 116