Question

Component depreciation is required under: A. both IFRS and U.S. GAAP. B. IFRS, but not U.S....

Component depreciation is required under:

A. both IFRS and U.S. GAAP.

B. IFRS, but not U.S. GAAP.

C. U.S. GAAP, but not IFRS.

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Answer #1

The component depreciation means that cost of an asset is allocated to different components of that asset and so each component needs to be depreciated separately. The costs of each parts of the large asset like property, plant and equipment is significant in relation to the total cost of the asset , that it needs to be depreciated separately.

In it required under IFRS, also it is permitted under the US GAAP, but not required under the US GAAP. In U.S. GAAP, component depreciation is permitted but not required.

The correct option is option B.

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