As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation?
A) The method used to ensure that the depreciation rate remains constant from year to year.
B) The method that requires that significant parts of a plant asset with different useful lives be depreciated separately.
C) The method used to prorate annual depreciation on a time basis.
D) The method of depreciation recommended for an asset that is expected to be significantly more productive in the first half of its useful life.

Question

Quizplus · Accepted Answer

Component depreciation requires that significant parts of a plant asset with different useful lives be depreciated separately rather than depreciating the entire asset at the same rate over its useful life. This is a requirement under IFRS.

As a Recent Graduate of State University You're Aware That