If a manufacturing entity purchases a machine, which create product X, and then the machine is installed and starts working and the learning effect still applies (machine not working on its target efficiency, lets say 1000 product X/hour, and the target efficiency is 2000 product X/hour) and in addition:
a) product X is bad quality and not for sale (all output for scrap)
or
b) product X has met a target quality and it is possible to sell it
In a) or b) or any other time we start to depreciate it?
I believe it should be b) but cant find relevant IFRS on it.
Ask the Tutor ACCA SBR
When to start depreciation?
5y ago#1Depreciation begins when the asset is available for use and continues until the asset is derecognised, even if it is idle. [IAS 16.55]
Start depreciation at the end of testing stage.
I would say that you would be unlikely to be asked anything about depreciation in SBR.
But IAS 16 is the standard.
Thanks a lot!
5y ago#3My pleasure.
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