CERTYNEX IFRS ACADEMY

For a machine acquired 2 years ago for 120,000 (initial life 10 years), whose total life is revised to 6 years, Gandine's accountant computes the year's depreciation as follows: 120,000 ÷ 6 = 20,000. What is the error?

Depreciation must spread the remaining carrying amount over the remaining life, not cost over the total life.

The 6-year life should have been applied from the following year only.

There is no computation error.

The machine should have been impaired for the difference.