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CSEET · Fundamentals of Accounting · Depreciation and Amortization

As per AS 10, which of the following statements about the depreciation method is correct?

A change of depreciation method made because the expected pattern of consumption of economic benefits has significantly changed is treated as a change in accounting estimate under AS 5. The method is reviewed at least each year-end, and revenue-based methods are not appropriate.

  1. AA method based on revenue generated by using the asset is appropriate
  2. BThe method must never be changed once selected
  3. CA change in method due to a significant change in the expected pattern of consumption is accounted for as a change in accounting estimateCorrect
  4. DThe method should be reviewed only when the asset is sold

Explanation

The method is reviewed at least at each financial year-end, and if the expected pattern of consumption changes significantly the method is changed and treated as a change in accounting estimate under AS 5. A revenue-based method is not appropriate.

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