Accounting for non-current assets overview

The Accounting Standard AASB 116 prescribes that the cost of an asset comprises:

• its purchase price, 
• costs directly attributable, for example delivery and installation fees,
• the initial estimate of the costs of dismantling and removing the item.

The ANU has two capitalisation thresholds that apply when accounting for non-current assets:

• $10,000 (GST Exclusive) for Property, Plant and Equipment (for example a computer),
• $20,000 (GST Exclusive) for Buildings and Infrastructure.

This means that if the GST exclusive cost of an item is below the capitalisation threshold, the item’s cost will be expensed (it will appear in the relevant Profit & Loss statement).

Non-current asset purchases are accounted for, as follow: 

• If a Business Unit is purchasing research equipment worth $10,000 (GST exclusive) and funds to pay for it are held in S (fund). The entry lines in the ES’ AP voucher are shown below:

• It is worthwhile noting that there are 3 entries involved, as non-current assets cannot be held in any other ledger but R or T, and funds for capital purchases have to be transferred accordingly between funds: in the example from R to S.
• There is also a fourth line in the entry that generates an AP. 
• The non-current asset purchased is then added to the AMS (Asset Management System). When adding non-current assets in AMS, it is important to replicate details that were used in the AP Voucher: 
  • asset class (research equipment), 
  • cost (GST exclusive), 
  • fund (R), 
  • department (24510) and,
  • the asset’s location as it facilitates stocktake procedures.

Generally speaking expenditures recurring in nature, cannot be capitalised; for example annual software fees.

Improvement costs can be capitalised if they increase at least one of the following aspect of an existing asset:

• service capacity,
• service quality,
• useful life.

Advise financial.reporting@anu.edu.au of any donated non-current assets so that they can be brought to book, insured and properly accounted for.