When a company has a piece of property, plant, or equipment that has different components that depreciate at different rates, the total cost should be allocated to each component and each component should be depreciated separately.

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Quizplus · Accepted Answer

This approach, known as component depreciation, is recommended because different components of an asset often have different useful lives and patterns of benefits, so depreciating them separately provides a more accurate reflection of their consumption and remaining value.

When a Company Has a Piece of Property, Plant, or Equipment