Cessation of depreciation

Learning objectives

• Determine the date on which depreciation ceases.L2
• Explain why an asset that is temporarily idle continues to be depreciated.L2, L3

Normative references

• IAS 16 §55Depreciation begins when the asset is available for use and ceases at the earlier of the date it is classified as held for sale (IFRS 5) and the date it is derecognised; it does not cease when the asset becomes idle (unless fully depreciated), but a usage-based method may result in a zero charge.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• True or false? A bottling line depreciated on a straight-line basis, shut down for three months because of a temporary drop in demand, stops being depreciated during the shutdown and resumes depreciation when it restarts.L3