CSEET · Fundamentals of Accounting · Depreciation and Amortization
Which of the following is NOT listed in AS 10 as a factor to be considered in determining the useful life of an asset?
Revenue generated by the activity using the asset is not a factor for useful life under AS 10. The listed factors are expected usage, physical wear and tear, obsolescence, and legal limits such as lease expiry. Revenue reflects prices and sales rather than consumption of the asset.
- AExpected usage assessed by capacity or physical output
- BTechnical or commercial obsolescence
- CLegal limits such as expiry dates of related leases
- DRevenue generated by the activity using the assetCorrect
Explanation
AS 10 lists expected usage, physical wear and tear, technical or commercial obsolescence, and legal or similar limits such as lease expiry. Revenue generated by an activity using the asset is not a factor, because revenue reflects selling activities and prices rather than consumption of the asset's benefits.
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