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Hey~~anyone know about this :-
Company ABC has several assets , Plant&machinery, FreeholdLand, Buildings,Motor vehicles.
The management would like to use difference depreciation method to depreciate the assets, such as, using straight line method to depreciate Building and Motor vehicles , using reducing balance method to depreciate plant and machinery .
IAS 16 is it allow the company do this ?
they can use difference depreciation method for difference categories assets ??
Thanks
Of course it’s allowed. How can you imagine the possibility of depreciating a building over the same time period as a computer system? And would you select 50 years for the computer system or would you favour 2 years for the building?
It makes NO SENSE at all to have just one depreciation rate. But all the assets in a class shall have the same depreciation rate applied to those assets in that class.
Not only that but there have been two exam question this century where a single asset has had 5 (yes, five) different depreciation rates applied to that single asset! An aircraft was one and a ferry was the other. Different elements within that one asset have different useful lives so different rates apply to those different elements
Ok?
In future, if you have a question like this that you want me to answer, put your question on the ask the tutor page rather than on the general forum
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