Depreciable amount and depreciation period

Learning objectives

• Calculate the depreciable amount.L1, L2
• Explain why an asset whose fair value increases continues to be depreciated.L2

Normative references

• IAS 16 §50The depreciable amount is allocated on a systematic basis over the useful life.
• IAS 16 §52Depreciation is recognised even if the fair value exceeds the carrying amount, as long as the residual value does not exceed the carrying amount; repair and maintenance do not negate the need to depreciate.
• IAS 16 §53The depreciable amount is determined after deducting the residual value.
• IAS 16 §54If the residual value equals or exceeds the carrying amount, the depreciation charge is zero until it subsequently decreases below the carrying amount.

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

1 question

• True or false? When the fair value of a warehouse rises above its carrying amount, the entity may suspend depreciation for as long as this situation lasts, even though its residual value remains below its carrying amount.L2