ACCA FR · Chapter 1 · Question 8 of 10
Osprey Co bought a machine on 1 January 20X1 for $200,000. It was depreciated on a straight-line basis over 10 years with no residual value. On 1 January 20X4 the directors decided the machine's remaining useful life was only 5 years. What is the depreciation charge for the year ended 31 December 20X4?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $28,000
Explanation
A change in useful life is a change in accounting estimate and is applied prospectively. Carrying amount at 1 January 20X4 = $200,000 - ($20,000 x 3) = $140,000. This is spread over the remaining 5 years: $140,000 / 5 = $28,000. Prior years are not restated.
More The conceptual framework and IAS 8 MCQs
- Q10Which statement correctly describes how prudence is treated in the IASB Conceptual Framework?
- Q1According to the IASB Conceptual Framework for Financial Reporting, which are the two fundamental qualitative characteristics of useful…
- Q2Under the IASB Conceptual Framework, how is an asset defined?
- Q3Which of the following is NOT one of the enhancing qualitative characteristics in the IASB Conceptual Framework?
- Q4The Conceptual Framework describes several measurement bases. Which of the following is NOT a current value measurement basis?