ICAEW AF · Chapter 11 · Question 10 of 13
A machine was bought for £60,000 and depreciated straight line over 10 years with no residual value. At the start of year 5, the total remaining useful life is reassessed as 3 years. What is the depreciation charge for year 5?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) £12,000
Explanation
Carrying amount after 4 years = £60,000 - (£6,000 x 4) = £36,000. A change in useful life is a change in accounting estimate, applied prospectively under IAS 8, so past depreciation is not restated. The carrying amount is spread over the revised remaining life: £36,000 / 3 = £12,000.
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