What Should Be the Basis for Choosing Depreciation Methods for Fixed

question 13

Multiple Choice

What should be the basis for choosing depreciation methods for fixed assets under IAS 16 (Property, Plant, and Equipment) ?

• A) Tax minimization
• B) Profit maximization
• C) Useful life of the fixed asset
• D) Pattern of economic benefits to be derived from the asset

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Definitions:

Contingency Planning

Taking into account the managerial options that are implicit in a project.

Abandonment

In business, this refers to the decision to stop developing, producing, or pursuing an asset, project, or product line, often due to it being unprofitable.

Average Total Cost

The total cost of production divided by the number of goods produced, representing the cost per unit of product.