It is expected that the service potential of a non-current asset will decline over time.The appropriate accounting treatment is to:
A) amortise the asset over its useful life.
B) disclose the effect in the notes to the statement of financial position if it is material in nature.
C) write-off the asset.
D) accrue the difference as a payable in adjusting entries at the end of the period.

Question

Quizplus · Accepted Answer

The appropriate accounting treatment for the decline in the service potential of a non-current asset over time is to amortize the asset over its useful life. This means that the cost of the asset is allocated over the period of time that it is expected to generate economic benefits. This results in a decrease in the value of the asset on the balance sheet each period, reflecting the gradual reduction in its service potential.

It Is Expected That the Service Potential of a Non-Current