Property, plant and equipment - depreciation principles

Overview of depreciation

Depreciation is a process of allocation whereby the accumulated historical cost of an item of plant and equipment is apportioned and expensed over its estimated useful life. A description of the terms relevant to the calculation of depreciation follows.

Accumulated Historical Cost The original or deemed cost of the asset plus additions, minus partial disposals.
Addition The original cost of any 'add-on', which becomes an integral part of an existing item of plant and equipment.
Written Down Value Accumulated Historical Cost less Accumulated Depreciation.
Written-off/writing-off The removal of an asset from the Plant and Equipment Register and the reversal of previous general ledger entries for that asset.
Full Disposals When an entire asset is either sold or scrapped.
Partial Disposals When only a part (or portion) of an asset is sold or scrapped.
Disposal Proceeds The total value of cash or equivalent received by the University in exchange for an asset which has been disposed.
Profit/Loss on Disposal The difference between an assets accumulated depreciation and its historical cost (or other value substituted for historical cost in the accounting records) less the net amount actually recovered on disposal, should be brought into account as a profit or loss, as the case may be, on disposal.
Useful Life The estimated period over which a depreciable asset is expected to be used, or the benefits represented by the asset are expected to be derived.


Depreciation rates

Depreciation and amortisation rates are generally based on remaining useful lives, using the straight line method of depreciation, as determined by valuation or as per the following schedule:

Asset Type Years
Computing Equipment  5
Research Equipment 7
Teaching Equipment 7
Motor Vehicles 7
Office Equipment 10
Other Equipment and Furniture 10
Musical Instruments 10
Buildings, Dwellings & Infrastructure 40