Start of depreciation

Learning objectives

• Determine the date on which depreciation begins.L1, L2
• Calculate a time-apportioned depreciation charge in the first year.L1, L2

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

• An entity's reporting date is 31 December. On 15 February 20X1 it receives the invoice for a machine costing {cost}, pays it on 31 May and starts production on 1 June. The machine is installed and available for use as intended from 1 April. Useful life: {useful_life}; residual value nil; straight-line method, time-apportioned. What is the depreciation charge for 20X1?L1