Depreciation and Capital Expence

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October 31, 2020 at 11:06 am #593641
mamed1992
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Dear Teacher,

I have a question about Depreciation when we have a Capital cost.

Do the Useful life of capital cost more than the whole asset Remaining Useful life?

I mean if we have an Asset with :

Total Useful life – 15 years
Remaining Useful life – 10 years
Capital expense – 15000 usd
Capital expense Useful life is 15 years or as the Asset Remaining life 10 years?

capital expenditure – i mean upgrade of asset not buying new one.

Thanks in advance for assistance.
October 31, 2020 at 11:33 am #593647
John Moffat
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Depreciation is calculated based on the remaining useful life.
October 31, 2020 at 5:17 pm #593682
mamed1992
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I know this, the question is how to caculate the upgraded amount which have to be capitalised?
which Useful life to use for this?
November 7, 2020 at 7:32 am #594309
P2-D2
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Hi,

You would use the remaining life of 10 years. We cannot use the total life as that will have been the life of the asset when it was initially purchased. We’re now upgrading the asset with 10 years left of its life, so 5 years will already have passed, so must use the remaining life.

Thanks
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