Asset Accounting Policy

Adopted by Council: 23 May 2011

Policy goals

The purpose of this policy is to provide a framework that ensures assets are recognised and accounted for in accordance with Australian Accounting Standards and the details contained in this policy.


Fair value - Is the amount for which an asset could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction.

Materiality -  In relation to information, that information which is omitted, misstated or not disclosed has the potential to adversely affect decisions about the allocation of scarce resources made by users of the financial report or the discharge of accountability by the management or governing body of the entity.

Consideration - In the context of this policy, shall be recognised in “monetary terms” e.g. purchase cost.


  1. Acquisition of assets

    The cost method of accounting is used for the initial recording of all acquisition of assets.  Cost is determined as the fair value of the asset given as consideration plus costs incidental to the acquisition, including architects’ fees and engineering design fees and all other costs incurred in getting the asset ready for use.
  2. Capitalisation

    Assets should have a useful life of greater than one year in order for expenditure to be capitalised and have a value above the Materiality Thresholds described below.
    Any expenditure considered to be Capital must also pass a materiality test.  Materiality levels are set so as not to misstate Financial Statements and to provide a guide whether it is practical from an administrative perspective that expenditure is capitalised.
    Materiality Levels are:
    Buildings and Improvements $10,000
    Land No capitalisation Threshold
    Plant and Equipment 
    Office Furniture and Equipment $1,000
    Plant & Equipment $1,000
    Art Work Collection $500
    Drainage Works $10,000
    Roads and Streets $10,000
    Land under Roads No capitalisation Threshold
    Bridges $10,000
    Playgrounds $5,000

    Networked/Aggregate Assets – Expenditure can still be capitalised on items that fall below materiality thresholds individually but operate together as a cohesive whole to form a substantial/significant total value.  Example is the computer network.
  3. Maintenance or Capital Expenditure

    3.1 Maintenance
    Expenditure on a non-current asset that does not meet capitalisation criteria is considered maintenance expenditure and must be expensed as incurred.  In general, maintenance expenditure will allow the asset to realise its expected service levels and estimated life.
    3.2 Capital
    Capital expenditure can relate to new or existing assets.  Capital expenditure shall be recognised (taken into consideration materiality levels) where:
      * Expenditure results in an effective increase in future economic benefits
      * Expenditure results in an increase in the quality of services provided by the asset beyond that previously determined; or
      * Expenditure results in an effective extension to the asset’s useful life.
  4. Revaluation of Non-current Assets

    Subsequent to the initial recognition of an asset, non-current physical assets, other than plant and equipment and office furniture and equipment are measured at fair value.  At balance date, Council reviews the carrying value of the individual classes of assets within the land and buildings and infrastructure assets to ensure each asset materially approximates its fair value.  Where the carrying value materially differs from the value the class of asset is revalued.
    Plant and equipment and office furniture and equipment are recognised at cost less accumulated depreciation and any accumulated impairment and are not subject to revaluation.

    A formal revaluation of land and buildings and infrastructure assets will be undertaken on a regular basis ranging from 3 to 5 years.  A formal valuation is to be performed by an experienced independent expert on a 3 to 5 year basis, however in the interim years, a recommendation may be made by an experienced council officer.

    Where assets are revalued, the revaluation increments are credited directly to the asset revaluation reserve except to the extent than an increment reverses a prior year decrement for that class of asset that had been recognised as an expense in which case the increment is recognised as revenue up to the amount of the expense.  Revaluation decrements are recognised as an expense except where prior increments are included in the asset revaluation reserve for that class of asset in which case the decrement is taken to the reserve to the extent of the remaining increments.  Within the same class of assets, revaluation increments and decrements within the year are offset.
  5. Physical Non-Current Assets Acquired without Consideration

    Non-monetary assets received without charge are recognised as assets and revenues at their fair value at the date that Council has control over the assets.  These assets included developer contributed assets such as road reserves, footpaths, kerb and channel, land under roads, neighbourhood parks etc that are the result of new subdivisions.  Trees are not recognised as there is currently no reliable method of valuation.

  6. Depreciation and Amortisation of Property, Infrastructure, Plant and Equipment

    All Property, Infrastructure, Plant & Equipment assets having a limited useful life are systematically depreciated over their useful lives to the Council in a manner which reflects the consumption of the service potential embodied in those assets.  Landfill Improvements are amortised over the estimated rehabilitation period per site.  Land, road formations and land under roads are not depreciable assets.  The depreciation method applied shall be the straight-line basis.  Depreciation rates shall be reviewed each year.

    6.1 Current Depreciation/Amortisation Table
    Asset Category Depreciation Useful Life/Amortisation Period Years Estimated Rate (%)
    Buildings and Improvements 50
    Office Furniture and Equipment3-10 10-33 
    Drainage Works20 60-100  1-2 
    Roads and Streets 13-87 1-8 
    Bridges 60-75 1-2 
    Art Works Collection   N/A N/A
    Playgrounds  20
    Landfill Improvements   6-31 3-17

    Various sub categories of furniture and equipment, plant and equipment, car parks and roads have different estimated useful lives and therefore attract different depreciation rates. 
  7. Fixed Asset Register

    Council will maintain a Fixed Asset register to ensure completeness and accuracy for all fixed assets and provide adequate record keeping.

Policy implementation 

 The implementation of this policy is immediate upon adoption by Council. This policy has been reviewed after giving proper consideration to all the rights contained within the Charter of Human Rights and Responsibilities Act 2006; and any reasonable limitation to human rights can be demonstrably justified.