Final answer:
When depreciating tangible non-current assets, there are certain things that you cannot do. You cannot ignore the useful life of the asset, you cannot use a depreciation method that does not accurately reflect the asset's consumption or wear and tear, and you cannot continue depreciating an asset once its carrying value has been fully depreciated.
Step-by-step explanation:
When depreciating tangible non-current assets, there are certain things that you cannot do. For example:
- You cannot ignore the useful life of the asset. The useful life is the estimated period over which the asset is expected to be used by the company. It is important to consider the useful life when calculating the depreciation expense.
- You cannot use a depreciation method that does not accurately reflect the asset's consumption or wear and tear. There are different depreciation methods such as straight-line, declining balance, and units-of-production, each suited for different types of assets.
- You cannot continue depreciating an asset once its carrying value has been fully depreciated. The carrying value is the amount recorded on the company's balance sheet and it represents the cost of the asset minus accumulated depreciation.
By following the rules and guidelines related to asset depreciation, businesses can ensure accurate financial reporting and make informed decisions regarding their non-current assets.