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Chapter 5

3.6 Depreciation in the year of acquisition and disposal

If a non-current asset is purchased or disposed of during an account period, there
are two ways in which the depreciation charge may be calculated. It can either be
assumed that:

 a full year of depreciation is charged in the year of purchase, and none in the
year of disposal, irrespective of when it the year the asset was acquired or
disposed, or

 a monthly or pro-rata depreciation charge is charged in the year of purchase
and disposal, based upon the number of months the asset was owned during
each accounting period under review.

Illustrations and further practice

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