Depreciation methods

Learning objectives

• Calculate a depreciation charge using the straight-line, diminishing balance and units of production methods.L1, L2
• Assess the method that best reflects the pattern of consumption of the benefits.L3
• Record the depreciation charge.L1
• Calculate a straight-line depreciation charge.L1
• Calculate a depreciation charge using the diminishing balance method.L2
• Calculate a depreciation charge using the units of production method.L2

Normative references

• IAS 16 §60The depreciation method reflects the pattern in which the asset's future economic benefits are expected to be consumed.
• IAS 16 §62Possible methods: straight-line, diminishing balance, units of production; the method chosen is the one that most closely reflects the expected pattern.

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

1 question

• A site vehicle costing {cost} is depreciated using the diminishing balance method at a rate of {rate}, applied to the carrying amount at the start of each year. It is available for use from the first day of the first year. What is the depreciation charge for the second year?L2