Assume that an asset was bought at a cost of $50 000.It is expected that the asset will have a useful life of 10 years with the straight-line depreciation method being used.At the beginning of year 5 the total useful life is re-estimated downward to 8 years.Under AASB 116 the annual depreciation expense for the final years of useful life is:

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The asset's original annual depreciation is $5,000 ($50,000 / 10 years). By the beginning of year 5, $20,000 ($5,000 x 4 years) has been depreciated. With the useful life revised to 8 years, there are 4 years remaining. The remaining book value to be depreciated is $30,000 ($50,000 - $20,000). Therefore, the new annual depreciation is $7,500 ($30,000 / 4 years).

Assume That an Asset Was Bought at a Cost of $50