IAS 16Chapter 8Lesson 1
Depreciating by component and recognising the charge
Step 1 of 9Learning objectives
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An asset is not always depreciated as a single block: each part whose cost is significant is depreciated separately, parts with the same useful life and method may be grouped, and the remainder is depreciated too. The charge goes to profit or loss, unless it is absorbed in producing another asset, such as inventories or an asset built by the entity.
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Learning objectives
- Identify the significant components of an asset and justify a breakdown or a grouping.
- Calculate the depreciation charge by component, including the remainder.
- Determine whether the charge is an expense or is included in the cost of another asset.
- Record a component-based charge and a charge included in the cost of inventories.