it must be regarded as a depreciable asset;

Depreciable assets

The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

If, for example, segment result reflects depreciation expense, the depreciable asset must be included in segment assets.

However, a change in the estimated useful life or the expected pattern of consumption of economic benefits of a depreciable asset affects the depreciation expense in the current period and in each period during the remaining useful life of the asset.

income taxes - recovery of revalued non-depreciable assets, and

depreciation of the depreciable assets, based on their fair values;

Buildings have a limited life and, therefore, are depreciable assets.

The depreciable amount of an asset is determined after deducting the residual value of the asset.

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.

Depreciation (amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life(43).

The depreciable amount of a leased asset is allocated to each accounting period during the period of expected use on a systematic basis consistent with the depreciation policy the lessee adopts for depreciable assets that are owned.

The depreciation policy for depreciable leased assets should be consistent with that for depreciable assets which are owned, and the depreciation recognised should be calculated on the basis set out in IAS 16, property, plant and equipment and IAS 38, intangible assets.

For example, an aircraft and its engines need to be treated as separate depreciable assets if they have different useful lives.

A finance lease gives rise to a depreciation expense for depreciable assets as well as a finance expense for each accounting period.

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

In practice, the residual value of an asset is often insignificant and therefore is immaterial in the calculation of the depreciable amount.

Similarly, grants related to depreciable assets are usually recognised as income over the periods and in the proportions in which depreciation on those assets is charged.

Estimates may be required, for example, of bad debts, inventory obsolescence or the useful lives or expected pattern of consumption of economic benefits of depreciable assets.

One case when a deferred tax asset arises on initial recognition of an asset is when a non-taxable government grant related to an asset is deducted in arriving at the carrying amount of the asset but, for tax purposes, is not deducted from the asset's depreciable amount (in other words its tax base);

The draft interpretation included both the issue addressed in this interpretation and the issue included in interpretation SIC-21, income taxes - recovery of revalued non-depreciable assets.

Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognised as income over the periods which bear the cost of meeting the obligations.

recognise any carrying amount of the negative goodwill as income over the remaining weighted average useful life of the identifiable depreciable/amortisable non-monetary assets acquired (see paragraph 62(a)).

The depreciation of depreciable leased assets should be on a basis consistent with the lessor's normal depreciation policy for similar assets, and the depreciation charge should be calculated on the basis set out in IAS 16, property, plant and equipment and IAS 38, intangible assets.

recognise any remaining carrying amount of the negative goodwill as income over the remaining weighted average useful life of the identifiable depreciable/amortisable nonmonetary assets acquired (treatment as in circumstances 4).

the amount of negative goodwill not exceeding the fair values of acquired identifiable non-monetary assets should be recognised as income on a systematic basis over the remaining weighted average useful life of the identifiable acquired depreciable/amortisable assets;

To the extent that negative goodwill does not relate to expectations of future losses and expenses that have been identified in the acquirer's plan for the acquisition and can be measured reliably, negative goodwill is a gain which is recognised as income when the future economic benefits embodied in the identifiable depreciable/amortisable assets acquired are consumed.