In Accordance with AASB 116 the Depreciation Method Applied to an Asset

question 24

Multiple Choice

In accordance with AASB 116 the depreciation method applied to an asset shall be reviewed:

• A) as determined by the company directors.
• B) every 3 years.
• C) at least at the end of each annual reporting period.
• D) as and when required.

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Definitions:

Gross Profit

The revenue a company retains after subtracting the expenses related to the production and sale of its goods or the provision of its services.

Operating Expenses

Recurring expenses related to the normal operations of a business, such as salaries, rent, utilities, and marketing costs, excluding the cost of goods sold.

Cost of Goods Sold

The expenditures directly related to generating the products a firm sells, which include the costs of materials and labor.

Classified Balance Sheet

A financial statement that groups a company’s assets, liabilities, and equity into categories, making it easier to understand a company’s financial position.