Asset Classification – A fundamental first step in Financial Reporting Valuation
Posted date: April 1st 2021 . Author AdminSydney .
Preston Rowe Paterson has developed a flowchart to assist our clients to classify assets and establish which Valuation and Accounting Standards and methodologies apply.
As noted in our Financial Reporting brochure (Click here to download the Financial Reporting Brochure) Material Change is the trigger for asset revaluation where an asset within a class of assets differs from the Carrying Amount (Ref. Clause 34, p. 10. AASB 116 – Property, Plant and Equipment).
This flowchart is indicative of the current industry standards as per AASB and IVSC, which are applicable to the categories of Operational Assets and its subclasses of Specialised and Non-Specialised Assets, as well as Non-Operational Assets and its subclasses of Surplus Assets or Assets, held for Sale and Property Investment, respectively. Further, the Test Questions (in the flowchart) have been designed to determine the Asset Class, the applicable Valuation Method and the Industry Standards and technical papers related to the valuation.
