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I was doing an mcq where to a machine a safety guard was installed , as it was I’m my opinion a modification and upgrade increasing the assets useful life I depreciated them together but that wasn’t the case and they were desperately dealt with, I don’t quite get why it was not capatilized the safety guard?
I don’t think a safety guard will increase an asset’s useful life. It could very well extend the useful life of the operative, but not the asset.
It could even be claimed to extend the useful life of the company as a whole because if Health and Safety inspectors were to call round and see a machine being operated without a safety guard, they would close down the company immediately
But the useful life of the asset itself is hardly likely to be extended.
It therefore wouldn’t qualify as an addition to the individual asset – rather it would be depreciated separately (desperately!!!!?)
Does that help?
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