A company stops using a machine because production is temporarily suspended, but it remains available for use. What normally happens to its depreciation?
Correct answer: B. Depreciation continues while the machine remains available for use
- A. Depreciation stops until production resumes
- B. Depreciation continues while the machine remains available for use
- C. Depreciation is transferred permanently to repairs expense
- D. Depreciation is recognized only when the machine is sold
Explanation
Temporary idleness does not by itself remove an asset from use for depreciation purposes. Depreciation normally continues unless the asset is fully depreciated or is classified as held for sale under the relevant rules.
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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.
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