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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Overhauling of assets
Hi,
I studied that overhauling or major inspection of asset would be capitalized and will be depreciated till the time next overhauling is due.
I am having difficulty in understanding it. Lets suppose if the asset is to be fully depreciated after five years and the next overhauling is due after 2 years (i.e. 3 years before the full depreciation of asset) then how the above para get fits which says that the capitazliation due to overhauling shall be depreciated over the period till next overhauling is due.
Hi,
You would separate out the cost of the overhaul from the total cost of the asset and depreciate this over the two year. The remaining cost of the asset would be depreciated over the full five years.
Thanks