Glossary

AASB 116

In short

AASB 116 is the Australian accounting standard for property, plant and equipment. It sets out how those assets are recognised, measured and depreciated over their useful lives, including the role of residual value and the choice of depreciation method. It is the standard behind the owned-asset depreciation methods most operators use. This is general information, not accounting or financial advice.

AASB 116

AASB 116 is the Australian accounting standard for property, plant and equipment, the owned physical assets that sit on an organisation’s balance sheet. It sets out how those assets are recognised, how they are measured, and how they are depreciated over the periods they are used. For a maintenance and finance team, it is the standard behind the everyday depreciation of pumps, plant, fit-out, vehicles and similar owned equipment.

This page provides general information about an accounting standard. It is not accounting, tax or financial advice. Confirm treatment with your accountant or adviser.

What the standard addresses

At a high level, AASB 116 concerns three things about property, plant and equipment. Recognition: when an item should be brought onto the balance sheet as an asset. Measurement: what cost or value it is carried at. Depreciation: how its cost, less any residual value, is spread across its useful life. The standard frames the inputs a finance team chooses for each asset, the useful life, the residual value and the depreciation method, and expects those choices to reflect how the asset is actually consumed.

AASB 116 and AASB 16

The two standards are easy to confuse by their numbers, but they cover different things. AASB 116 is about owned property, plant and equipment. AASB 16 is about leases, where the lessee recognises a right-of-use asset and a lease liability rather than owning the asset outright. An operator typically has assets under both: equipment it owns under AASB 116 and equipment it leases under AASB 16.

How it relates to Cohiva Control

Cohiva Control’s owned-asset depreciation methods, straight-line, diminishing value, double declining balance, units of production and sum of years digits, apply to the kind of property, plant and equipment this standard concerns, while its AASB 16 method handles leases. The product computes depreciation using each asset’s cost, residual value and useful life, holds money as a fixed-precision decimal rounded half up, and never reduces book value below the residual value. How you classify and treat a specific asset under the standard is a decision for your accountant; Cohiva Control computes and records the depreciation once those choices are made.

Part of the Cohiva platform

Cohiva Control is part of the Cohiva platform. Leisure operators often run it with Cohiva Complex, and finance teams connect it to Cohiva Crunch for the general ledger. Explore the platform at www.cohiva.app.

Frequently asked questions

What does AASB 116 cover?
Property, plant and equipment: how those assets are recognised on the balance sheet, how they are measured, and how they are depreciated over their useful lives, including residual value and the depreciation method chosen.
How is AASB 116 different from AASB 16?
AASB 116 deals with owned property, plant and equipment. AASB 16 deals with leases, recognising a right-of-use asset and a lease liability. They cover different kinds of asset.
Which depreciation methods relate to AASB 116?
The owned-asset methods, such as straight-line, diminishing value, double declining balance, units of production and sum of years digits, apply to property, plant and equipment under this standard.