IAS 16Chapter 8Lesson 2
Depreciable amount, residual value, useful life, land and buildings
Step 1 of 8Learning objectives
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The three parameters that set the depreciation charge: the amount to depreciate (cost less residual value), the residual value itself (reviewed each year, zero charge if it reaches the carrying amount) and the entity-specific useful life; plus the case of real estate: land and building separated, land generally not depreciated, restoration costs of land depreciated over the period of benefits.
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Learning objectives
- Calculate the depreciable amount of an item of property, plant and equipment and the resulting charge.
- Determine a residual value consistent with its definition and measure its effect on the charge, including when it reaches the carrying amount.
- Estimate a useful life from the relevant factors and the entity's renewal policy.
- Separate land and building within a property and calculate depreciation excluding the land.