7. Property, plant and equipment

Question 1

7. What is included in the cost of an asset?

Answer 1

Purchase price
Directly attributable costs
The initial estimate of dismantling/restoration costs
Borrowing costs (qualifying asset)

Question 2

7. What are the three depreciation methods that can be used?

Answer 2

• Straight-line method – this results in a constant charge over the asset’s useful life (provided
  that the residual value does not change).
• Diminishing balance method – this results in a decreasing charge over the asset’s useful life.
• Units of production (usage) method – this results in a charge based on the expected use
  or output.