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If a manufacturing entity purchases a machine, which create product X, and then the machine is installed and starts working and the learning effect still applies (machine not working on its target efficiency, lets say 1000 product X/hour, and the target efficiency is 2000 product X/hour) and in addition:
a) product X is bad quality and not for sale (all output for scrap)
or
b) product X has met a target quality and it is possible to sell it
In a) or b) or any other time we start to depreciate it?
I believe it should be b) but cant find relevant IFRS on it.
Depreciation begins when the asset is available for use and continues until the asset is derecognised, even if it is idle. [IAS 16.55]
Start depreciation at the end of testing stage.
I would say that you would be unlikely to be asked anything about depreciation in SBR.
But IAS 16 is the standard.
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