CAS 16- Depreciation and Amortization

Question 1

Definition

Answer 1

1. Measure of wearing out consumption or other loss of value of an asset arising from use effect of time or obsolescence due to technology
2. Systematic allocation of the depreciable amount of an intangible asset over its useful life

Question 2

Principles of measurement

Answer 2

1. Measured based on depreciable amount and useful life
2. Regulated industry- depreciation- regulation
3. Useful life- depreciable asset- factors
   a) Expected physical wear and tear
   b) Obsolescence
   c) Legal or other limits on the use of asset
4. The useful life of an intangible asset that arises from contractual or other legal rights shall not exceed the period of such rights but maybe shorter dependng the period over which the entity expects to use assets
5. Depn considered from time first put in use
6. Depn on addition or extension to existing asset shall be based on remaining useful life
7. Impact of higher depn due to reval not assigned to head depn
8. Impairment loss on asset-excluded- COP
9. Method(depn)-reflect-econ benefits-consumed-entity
10. Any method of depn- over useful life
11. Method(amor)- reflect- econ- accrued-entity
12. The method and rate-reviewed-annually-change in expected pattern or loss of econ benefits-changed
13. Depn-not exceed- original value- net of residual
14. Cost of small assets shall be written off in year of purchase

Question 3

Assignment

Answer 3

1. Direct- cost object- econ feasible manner
2. Indirect - a) Cause and Effect
   b) Benefits received

Question 4

Presentation

Answer 4

Dep and Amm , if material , shall be presented as a separate cost head in statements of cost.

Question 5

Disclosures

Answer 5

1. Basis of distribution
2. Addnl depn on revaluation
3. Credits or recoveries related to depn
4. Depn due to temp retirement of assets from prodn of goods and services not included in cost