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Service Agreement Information Kit for Funded Organisations

3.7.6 Depreciation in accordance with Australian Accounting Standard

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The straight-line method of calculating depreciation is preferred by the department (see Sample depreciation of non-current physical asset).

Depreciation should commence in the month after the acquisition and installation of the asset (disregarding fractions of a month). The disposal of an asset should cause depreciation to cease at the end of the month in which the asset was disposed of (disregarding fractions of a month).

If an organisation decides not to use the standard depreciation rates in the document 'Recommended annual depreciation rates', it should engage a suitably qualified person to determine a rate consistent with the relevant method for calculating depreciation on assets of that type as determined by the Commonwealth Commissioner for Taxation based on the asset's estimated useful life at the time of acquisition. This approach may be necessary when dealing with any specialist equipment.