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consistently from year to year. However, IAS 16 requires that the depreciation method should be 

reviewed at least each financial year-end. If there has been a significant change in the expected pattern 

of economic benefits from those assets, the method should be changed to suit this new pattern. When 

such a change in depreciation method takes place, the remaining carrying amount is depreciated under 

the new method, ie only current and future periods are affected; the change is not retrospective. 

 

(IAS 16, para. 61) 

4.12 Example: change in method of depreciation 

Jakob Co purchased an asset for $100,000 on 1.1.X1. It had an estimated useful life of five years and 

it was depreciated using the reducing balance method at a rate of 40%. On 1.1.X3 it was decided to 

change the method to straight line. 

Required 

Show the depreciation charge for each year (to 31 December) of the asset's life. 

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