PRC-1 · Chapter 6 · Question 29 of 100
If an asset's useful life estimate is revised downwards (e.g., from 10 years to 8 years total) halfway through its life, how does this specifically affect the annual depreciation charge?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It increases prospectively.
Explanation
A shorter useful life means the remaining depreciable amount must be expensed over a shorter remaining timeframe, resulting in a higher annual depreciation charge moving forward.
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