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Sir, I mean this:
1: For change of depreciation method, depreciation for the year is based on both the whole current year plus remaining useful life,
BUT
2:For change of useful life or revaluation or residual value, we recalculate from where we ended.If you please can check IAS16 subsections of BPP on Change of Useful Life and Change of Depreciation Method, and clarify for me, I would highly appreciate it.
I do not have the BPP Study Text – only the Revision Kit.
If there is a change of depreciation method, then the depreciation is re-calculated as though the new method had always been used (per IAS 8).
If there has been a revaluation then we calculate depreciation on the new value.
If there is a change in the useful life then we calculate this years depreciation based on the new useful life. The ‘trick’ in this case, is that if we are at the end of the year calculating this years depreciation and are told (for example) that the useful life is 2 more years, then we calculate taking this into account and so we depreciate over 3 years because there is the current year as well. That is why the BPP answer of 107,500 is completely correct, as I have explained in the previous post.
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