The purchase of a building would involve a number of different components, such as the foundation and frame, heating and air conditioning systems, and other non-weight-bearing parts. Which of the following statements concerning the components-based approach for determining depreciation is true?
A) Both U.S. GAAP and IFRS require the components-based approach.
B) Both U.S. GAAP and IFRS allow the components-based approach but do not require it.
C) IFRS allows the components-based approach but does not require it; U.S. GAAP requires the components-based approach.
D) U.S. GAAP allows the components-based approach but does not require it; IFRS requires the components-based approach.

Question

Quizplus · Accepted Answer

Under IFRS, the components-based approach is required, meaning significant parts of an asset must be depreciated separately. U.S. GAAP allows but does not require this approach.

The Purchase of a Building Would Involve a Number of Different