When a company recognises a depreciation credit resulting from a review of the estimated residual value of a depreciable asset,the depreciation debit should be recognised in accumulated depreciation and the depreciation credit should be recognised:

Question

Quizplus · Accepted Answer

The depreciation credit should be recognised in the current period depreciation expense as it represents an adjustment to the estimated useful life and / or residual value of the depreciable asset, and therefore affects the amount of depreciation expense recognised in the current period. The other options are not appropriate as they do not reflect the true economic impact of the adjustment on the financial statements.

When a Company Recognises a Depreciation Credit Resulting from a Review