Consensus
8
Condition-based depreciation and other methods of depreciation of long-lived physical assets, including infrastructure assets, that include any of the following characteristics do not comply with AASB 116, and shall not be adopted:
(a) the depreciation expense is not determined by reference to the depreciable amount of the asset;
(b) the depreciation expense is determined without consideration of technical and commercial obsolescence, such as potential changes in consumer demand, and related factors which can influence the consumption or loss of future economic benefits during the reporting period;
(c) expenditure on maintenance and on enhancement of future economic benefits are not separately identified where reliable measures of these amounts can be determined, and are not recognised as an expense of the reporting period in which the expenditure was incurred in the case of maintenance expenditure or as an asset in respect of asset enhancement expenditure;
(d) the asset is presumed to be in a steady state and a ‘renewals accounting’ approach is adopted whereby all expenditure on the asset is recognised as an expense in the period in which it is incurred without consideration of whether that expenditure enhances the future economic benefits of the asset; and
(e) the major components of complex assets are not identified and are not depreciated separately where this is necessary to reliably determine the depreciation expense of the reporting period.