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. Natural resources, intangible assets, and investments will be covered in the next modules.īy the end of this section, you will be able to: (a) differentiate between current expenses and capital expenditures (b) describe and compute depreciation expense and know how it relates to accumulated depreciation (c) record purchases and sales of fixed assets and (d) understand the disclosures in the financial statements related to property, plant, and equipment (PP&E).In the event that an organization needs to sell properties to collect capital, it is necessary for businesses to control their PP&E. In this section, we will look at the accounting treatment for plant assets. Property and equipment, net consists of the following (in millions):Ĭomputer software, office equipment and other Here is more detail on the $35 billion in property and equipment that Facebook reported on its 2019 financial statements.
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