Table of Contents

8.13.2 Method of depreciation

The depreciation method used shall reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the entity.

The depreciation method applied to an asset shall be reviewed at least at the end of each annual reporting period and, if there has been a significant change in the expected pattern of consumption of the future economic benefits embodied in the asset, the method shall be changed to reflect the changed pattern. Such a change shall be accounted for as a change in an accounting estimate1.

A variety of depreciation methods can be used to allocate the depreciable amount of an asset on a systematic basis over its useful life.

The entity selects the method that most closely reflects the expected pattern of the future economic benefits embodied in the asset. That method is applied consistently from period to period unless there is a change in the expected pattern of consumption of those future economic benefits2.

The method of depreciation is to be supported by appropriate audit evidence.


  1. AASB 116, paras 60-61.

  2. AASB 116, para 62.