Question 15

Garvey Ltd depreciates an item of machinery using the straight-line method. The asset was revalued downwards after three years of use. The remaining useful life of the machinery and the residual value are determined to remain the same. Which of the following relationships reflects the effect of the revaluation on the prospective depreciation of the machinery?

Depreciation rate = Same; Annual depreciation expense = Higher

Depreciation rate = lower; Annual depreciation expense = Same

Depreciation rate = Higher; Annual depreciation expense = Higher

Depreciation rate = Same; Annual depreciation expense = lower

Which of the following statements is incorrect?

		If a residual value is determined to be of a material amount, the entity is required to review the residual value at the end of each reporting period.
		For the purposes of recognising property, plant and equipment assets the acquisition date is the date the consideration is paid.
		AASB116 Property, Plant and Equipment requires revaluations to be applied to assets on a class-by-class basis.
		Under the cost model, after initial recognition of a property, plant and equipment the assetmust be carried at its cost less accumulated depreciation and less accumulated impairment losses.