Arvane acquired a machine for 120,000 on 1 January 2023, depreciated on a straight-line basis over 10 years with no residual value. At 1 January 2025, the total useful life is reduced to 6 years. Compute 2025 depreciation under the prospective treatment, the amount an erroneous retrospective restatement would give (new life applied from the start) and the gap.
- Acquisition cost
- 120,000
- Initial useful life
- 10
- Revised total useful life
- 6