Topic 2 - Depreciation of Non-Current Assets

Question 1

What is depreciation?

Answer 1

Question 2

What are the three important questions that arise regarding depreciation?

Answer 2

Question 3

Define the depreciable amount.

Answer 3

Question 4

Define the recoverable (or residual) amount.

Answer 4

Question 5

For a depreciable asset, what has to occur for no depreciation to be charged?

Answer 5

Question 6

Define the carrying amount.

Answer 6

Question 7

What are the rules for time periods regarding the useful life of an asset?

Answer 7

Question 8

What does production or actual usage amounts mean regarding the useful life of an asset?

Answer 8

Question 9

Differentiate between the four methods of depreciation.

Answer 9

Question 10

What are the special calculation issues for depreciation?

Answer 10

Question 11

How are depreciation charges normally recognised?

Answer 11

Question 12

When a depreciable asset is sold, which issues need to be considered?

Answer 12

Question 13

Issues to think about…

1) Depreciation of assets with multiple components?
2) When does the depreciation of an asset start?
3) Can we change a depreciation rate or method?
4) How are asset modifications depreciated?

Answer 13