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3 Jul. 2015

Agenda Decision on the Definition of Residual Value

The AASB has issued an Agenda Decision that may change the current practice of some not-for-profit public sector entities and could result in increased depreciation and further componentisation of assets.

The Agenda Decision addresses a request received to clarify whether residual value, as defined in AASB 116 Property, Plant and Equipment, includes cost savings from the re-use of parts of an infrastructure asset by the entity. The AASB concluded that the definition of residual value in AASB 116 does not include cost savings from the re-use of parts of an asset by an entity.  The Board’s rationale for its conclusions is set out in its Agenda Decision Definition of Residual Value in relation to Infrastructure Assets.

Access the media release here.