The property, plant and equipment note

What the property, plant and equipment note must show and how to tie it to the client's fixed asset register and trial balance before the set is issued.

By Achekam · 11 October 2026 · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya

The property, plant and equipment note is usually the longest table in a small company's statements and one of the least read. Readers skip it until something looks wrong: a vehicle sold during the year that is still there, depreciation that does not agree to the income statement, a carrying amount that rose with no additions. When a reviewer finds one of those, it is usually because the note was built from the trial balance alone, with nobody checking it against the asset register.

This article covers what the note must show, how to agree it to the client's register, how to deal with disposals, what the policy should say and what to do when the register and the ledger disagree.

The movement schedule: cost, additions, disposals and depreciation

For each class of property, plant and equipment, the note reconciles the carrying amount at the beginning and end of the period. The usual classes: land and buildings, plant and machinery, motor vehicles, furniture and fittings, computer equipment. The usual movements:

• cost or valuation at the beginning of the year;
• additions;
• disposals;
• depreciation for the year;
• accumulated depreciation on disposals;
• impairment, if any;
• cost, accumulated depreciation and carrying amount at the end.

Under full IFRS the reconciliation is presented for the comparative period as well; IFRS for SMEs says it need not be presented for prior periods, although many firms show it anyway. The IFRS Foundation's summary of IAS 16 explains the principles for recognising property, plant and equipment, measuring its carrying amount and working out depreciation charges and impairment losses.

Agreeing the note to the client's fixed-asset register

The note's figures come from the trial balance; the detail behind them should come from the register. In Achekam, notes take their figures from the mapped trial balance. Achekam does not calculate depreciation for the statements: it presents the depreciation in the trial balance, flags when the charge does not agree with the movement in accumulated depreciation, and lets staff post a year-end adjusting entry.

That flag is a starting point, not the whole check. Agree:

1. Cost by class in the trial balance to the register's cost totals.
2. Additions to invoices, confirming each is capital and not a repair.
3. Accumulated depreciation by class to the register.
4. The depreciation charge to the register's charge for the year and to the expense in the income statement.
5. Disposals to sale agreements or scrapping records.

Where the client keeps its own books on Achekam, its fixed-asset register lets it add assets at cost, depreciate them monthly by straight line or reducing balance with a journal each month, and dispose of them with the profit or loss posted. Tax wear-and-tear is not worked out there, so the tax computation needs a schedule of its own. A register run that way should agree to the ledger by construction, but test it anyway, because a manual journal to an asset account bypasses the register. The client side is covered in the client's fixed asset register.

Disposals and the profit or loss on them

Disposals cause more errors than additions. The common ones:

• The proceeds are credited to the asset's cost account, leaving the asset's cost and depreciation in the books and no profit or loss recognised.
• The asset is removed from cost but not from accumulated depreciation.
• A trade-in is recorded at the net cash paid for the new vehicle, understating both the disposal proceeds and the cost of the new asset.

A worked example in words: a client trades in a delivery vehicle for a new one. The dealer's invoice shows the full price of the new vehicle, an allowance for the old one and the balance paid. The correct entries record the new vehicle at its full price, remove the old vehicle's cost and accumulated depreciation, and recognise the difference between the trade-in allowance and the old vehicle's carrying amount as a profit or loss on disposal.

If the client's ledger has not been corrected, post the correction as a year-end adjusting entry. A wrong adjusting entry is reversed with who and why, never deleted.

Useful lives and methods in the policy wording

The policy should state the measurement basis, the depreciation methods and the useful lives or rates for each class. Achekam's Studio includes standard accounting policy wording based on IFRS for SMEs, labelled for review before issue, and staff can write their own policies.

The usual failure is a policy that says one thing while the register does another: straight line for vehicles in the policy, reducing balance in the register. Read the register's settings and make the policy match them, or change the register. Useful lives and residual values are estimates to be reviewed at each year end; a change is applied prospectively and disclosed, not treated as an error. Depreciation in the statements goes further.

What to do when the register and the ledger disagree

Differences are normal; unexplained ones are not. Work through them in order:

• Timing. An addition posted to the ledger in the last week of the year but entered in the register after year end.
• Classification. An asset recorded under one class in the register and another in the ledger. Correct the mapping or the register so the note's columns are right.
• Missing disposals. Assets in the register that the client no longer has. Ask for a list of assets sold, scrapped or stolen during the year.
• Ghost assets. Balances in the ledger with no register entry, often carried forward for years.

Then run the automated review on the draft. It lists findings for a person to accept, resolve or dismiss, and it is advice only; it does not block signing. Where the note needs a class the standard layout lacks, a firm can add its own statement lines and groups, and each custom line still totals into a standard line.

A note that agrees to the register, the ledger and the income statement is one of the easier wins in a set. Plan the agreement work before the draft is built, rather than after the reviewer finds the gap.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.