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Hi friends

In case a company continues to use fully depreciated assets on a regular basis (say, about 20% of the total cost of assets in that asset class have been fully depreciated but still being used), will it trigger a case for re-looking at the estimated useful life of the asset class?

It definitely would pose practical difficulties.

Are there any guidance on this in IFRS? Or accepted best practices?

Thanks
Luxman Shankar

It implies the depreciation rate was potentially incorrect; maybe you'll have a change in accounting estimate going forward.

The residual value, useful life, and depreciation method should be reviewed at least at the end of each financial year (IAS 16.51,61; IAS 38.104-106), so it's time to do that

also, IAS 16.79(b) encourages disclosing the gross carrying amount of any fully depreciated property, plant and equipment that is still in use

Thanks JRSB and Marek.

Will there be a chance of the existing estimate be treated as an erroneous estimate and the impact of the revised estimated useful life asked to be implemented with retrospective effect ( i.e an error) that requires restatement?

Was it an outright error/mistake, or just an incorrect estimate? Most likely the latter so not restated, just change the estimate going forward.

Thanks

Dears,
In line with this subject matter, is that possible to extend the useful life of fully depreciated assets without changing the historical/initial/ cost? If yes, how can we determine the value at revised life and afterwards?

is it because of an error in earlier periods, or new information about the useful life?

The asset is fully depreciated and the company wants to extend its useful life because the assets are in use but no change in amount (zero or nominal value as indicated in the book of account).

so the estimate of useful life may have been wrong in the first place then.

but anyway, once it's fully depreciated you can't bring the value back unless you think there was an error to restate.

or have you overhauled the asset so that it has a new cost to depreciate?

Thanks a lot