A non-current property, plant and equipment asset is depreciated using the straight-line method over a 10-year useful life. The asset was revalued upwards after four years of use. There is no change in the remaining useful life of six years or to the residual value. Which of the following relationships reflects the effect of the revaluation on the future depreciation of the asset? Depreciation Rate Annual depreciation expense

Question

A non-current property, plant and equipment asset is depreciated using the straight-line method over a 10-year useful life. The asset was revalued upwards after four years of use. There is no change in the remaining useful life of six years or to the residual value. Which of the following relationships reflects the effect of the revaluation on the future depreciation of the asset? Depreciation Rate      Annual depreciation expense

Quizplus · Accepted Answer

After revaluation upwards, the carrying amount of the asset increases. Since the depreciation rate remains the same (straight-line over the remaining useful life), the annual depreciation expense will be higher to spread the increased carrying amount over the remaining useful life.

A Non-Current Property, Plant and Equipment Asset Is Depreciated Using