A building contains a roof that has a useful life different from the building structure. How should these significant components normally be depreciated?
Correct answer: C. Separately over their respective useful lives
- A. As one asset over the shorter life
- B. As one asset over the longer life
- C. Separately over their respective useful lives
- D. Only when the roof is eventually replaced
Explanation
Significant parts of an asset with different useful lives are accounted for as separate components. Each component is depreciated over the period in which its own economic benefits are expected to be consumed.
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About Depreciation and Non-Current Assets
Non-current assets are long-term resources recorded at cost and reduced by accumulated depreciation to show their carrying amount. Coverage includes straight-line and reducing-balance methods, residual value, useful life, depreciation adjustments, capital and revenue expenditure, and the profit or loss arising when an asset is disposed of.
Practise Depreciation and Non-Current Assets
33 free Depreciation and Non-Current Assets MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
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