AASB 116 Property, Plant and Equipment 7-10: Recognition principle: capitalise a cost as a PPE asset only when future economic benefits are probable and the cost can be reliably measured, applying that test to every cost when incurred and choosing the unit of account with judgement

What does 7-10 require?

A cost relating to a tangible operating asset is recognised as an asset only if two conditions hold: it is probable that the entity will receive the future economic benefits tied to the item, and the cost can be measured reliably. The entity applies this test to every such cost at the moment it is incurred, whether it is the initial outlay to buy or build the item or a later outlay to extend, partly replace or service it; lease-related costs for assets used in constructing or servicing the item (for example depreciation of right-of-use assets) may form part of its cost. Spares, stand-by units and servicing gear are PPE when they fit the definition and are inventory when they do not. The Standard does not dictate the unit of measure, so judgement decides what counts as one item; individually small items (moulds, dies, hand tools) may be grouped and tested as a whole.