PRC-1 · Chapter 6 · Question 3 of 100
At what point should an entity COMMENCE the depreciation of an item of property, plant, and equipment?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) When the asset is available for use (in the location and condition necessary for it to be capable of operating in the manner intended by management).
Explanation
Depreciation begins when the asset is available for use, meaning it is in the correct location and condition to operate as intended, regardless of whether it is actively being used yet.
More Property, Plant and Equipment MCQs
- Q5How should refundable sales taxes (e.g., input VAT) paid on the purchase of a non-current asset be treated in the accounting records?
- Q6Which of the following is considered a 'Capital Expenditure'?
- Q7If a business incorrectly records the purchase of a new computer (capital expenditure) as office stationery (revenue expenditure), what is…
- Q8Which of the following defines the 'Depreciable Amount' of a non-current asset?
- Q9What is the primary rationale for charging depreciation on non-current assets?