What is the basis for choosing depreciation methods for fixed assets under IAS 16 (Property,Plant,& 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

Question

Quizplus · Accepted Answer

The basis for choosing depreciation methods for fixed assets under IAS 16 is the pattern of economic benefits to be derived from the asset. The accounting standard requires entities to choose a depreciation method that reflects the expected pattern of consumption of the asset's economic benefits. This means that the method chosen should match the way the asset is used and the way it contributes to revenue generation over its useful life. It is important to note that tax minimization and profit maximization are not relevant considerations when selecting a depreciation method under IAS 16.

What Is the Basis for Choosing Depreciation Methods for Fixed