Which factor is most relevant when estimating the useful life of a machine?
Correct answer: B. Expected usage and the machine's expected physical wear
- A. The number of employees in the finance department
- B. Expected usage and the machine's expected physical wear
- C. The amount of cash held by the business
- D. The market price of unrelated inventory
Explanation
Useful life depends on expected usage, physical wear, technological obsolescence and legal or contractual limits. Internal staffing, cash balances and unrelated inventory prices do not determine how long the machine provides benefits.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
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.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Depreciation and Non-Current Assets questions
A company stops using a machine because production is temporarily suspended, but it remains available for use. What normally happens to its depreciation?
Under the cost model for property, plant and equipment, how is an asset normally measured after initial recognition?
Why are freehold land and a building on that land normally accounted for separately?
A major inspection is necessary for a machine to continue operating, and the inspection cost meets the recognition criteria. How is the cost normally treated?
Under IAS 36, what is the recoverable amount of an asset?
If an impairment loss on a non-revalued machine is later reversed under IAS 36, what is the maximum carrying amount after reversal?