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The profit and loss account is paid for repairs and maintenance. PPE are quantified as rate less accrued depreciation and damage losses. It effectively owns, manages, and builds infrastructure for renewable energy. In Australia, AGL Energy Limited is the biggest retailer of gas and electricity. However, any assistance should not be considered as returns but as a negative expenditure. The service or loss should be involved in the profit or loss on de-recognition. The carrying sum of an item of land, plant, and equipment shall be de-recognized if removed, substituted, disposed of, or if no potential economic benefits from its use are required. Learn More Retirement, Replacement, and Disposal When depreciation of the asset starts, this is considered to occur. The cost identification of the carrying amount of land, plant, and equipment ceases to be recognized when the asset is in the state and condition required to function in the manner expected by the management. In certain situations, an asset may be considered available for use and, thus, depreciation may begin, even though it is not currently in use. For most network assets, this is known to be when the assets are detected and put into operation (in-service date). When the asset is can function in the mode expected by management, depreciation shall commence. Land and easements have valuable lives on an infinite basis and are thus never depreciated. Accordingly, the asset’s cost is amortized by a P&L depreciation expense over its beneficial life. At some stage in the future, they will stop to deliver financial assistances to AusNet Services. Land, plants, and facilities have limited useful lives, excluding land and easements. The Asset Accounting and control team will conduct a partial de-recognition of the aggregate asset when individual objects are replaced. These are often combined in the Fixed Asset Registry into a single asset (for example, for contestable metering assets). Components also need to be replaced or refurbished before the completion of the life of the total asset. AusNet Services accounts separately in the Fixed Asset Registry for land, plant, and equipment components using different useful lifetimes. Property, plant, and equipment products also consist of various sub-components (Lau and Wong, 2019, p. The Accounting Units and ComponentsĬompanies accounting units and components are a measure of respective financial strengths and asserts. These groups refer to the asset class aggregations in the Registry of Fixed Assets. In the financial statements, land, plant, and equipment are divided into different groups: land, buildings, easements, gas distribution network, other plant and equipment, capital works in progress, and transmission networks. The Cost of contributed assets is assumed to be the fair value of the purchase when we gain control. Property, plant, and equipment are calculated at the expense the particular company. Evaluation of AusNet Services Limited and AGL Energy Limited’s PPE Accounting Policies AusNet Services Limited

Further comments of the considered factors in the framing of the accounting policies for PPE have been evaluated. Below is a detailed analysis of two companies’ PPE policies in the Utility Sector listed in the Australia Stock Exchange for AusNet Services Limited and AGL Energy Limited. In the structuring of accounting policies for PPE, all the factors that are related to it, such as useful life of an asset, appropriate model for determination of asset values, depreciation method for PPE, PPE impairment policy, initial and subsequent recognition criteria, and useful asset life are included. IntroductionĪs one of the balance sheet’s significant sections, good accounting policies should be developed for Plant, Property, and Equipment (PPE). This report analyses the major accounting policies used to determine the best PPE value based on AusNet Company and AGL Energy Limited. Although most fixed assets depreciate over time and are not readily turned into cash, certain assets will rise in value over time allowing a business the potential opportunity to collect cash. In the event that an organization needs to sell properties to collect capital, it is necessary for businesses to control their PP&E.