Question

in calculating partial-year depreciation, depreciation is normally calculated on the basis of which of the following? select answer from the options below a full year's depreciation in the period of acquisition and none in the year of disposal a half year's depreciation in the period of acquisition and disposal the nearest fraction of a year any of these choices may be used as long as it is applied consistently from year to year and the financial statements are not materially affected.

Answer 1

Calculating partial-year depreciation can be done using a full year's depreciation in the acquisition year, a half year's convention for both acquisition and disposal, or the nearest fraction of a year. Consistency and accuracy in financial reporting are essential.

Step-by-step explanation:

In calculating partial-year depreciation, there are a few different conventions that can be used depending on the business's accounting policies and the requirements of the applicable financial reporting framework. The methods you have described include:

• A full year's depreciation in the period of acquisition and none in the year of disposal.
• A half year's depreciation in both the period of acquisition and the year of disposal, which is often known as the half-year rule.
• Depreciation based on the nearest fraction of a year, which may consider the exact month or day an asset was acquired or disposed of.

Regardless of the method chosen, the key principle is that the approach should be applied consistently from year to year, and it should not materially misstate the financial statements.