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Chapter 6

3.6 Changing estimates

An entity should apply the same rates and methods of depreciation
consistently throughout the life of its non-current assets. However, if it
believes that its estimates of useful life and/or residual value are no
longer appropriate it is permitted to change them with no further recourse.
In order to do this it simply works out the new depreciation charge relating
the asset based on the revised estimate of useful life or residual value.

Illustrations and further practice

Now try question TYU 5 from Chapter 7 of the Study Text.

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