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Depreciable asset

For property, plant and equipment, depreciable amount is cost or a substituted amount less residual value; land usually has an unlimited life and is not depreciated. Significant components with different consumption patterns are depreciated separately where required. Finite-life intangible assets are generally amortised under IAS 38 rather than described as depreciated; indefinite-life intangibles are not amortised.

Worked example

A vehicle costs $50,000, has a $5,000 residual value and a five-year useful life. Straight-line depreciation is ($50,000 − $5,000) / 5 = $9,000 a year, assuming the estimate remains appropriate.

Common mistake

Ignoring residual value, automatically depreciating land, or calling amortisation of a finite-life intangible PPE depreciation.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA FR Direct September 2026–June 2027
ACCA SBR Direct September 2026–June 2027