Asset Consumption Graph

An asset consumption graph is a graph that attempts to plot how future economic benefit associated with an asset reduces over time.

An understanding of how assets are consumed is important for a number of reasons, including that AASB 116 states that the depreciation method used shall reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the entity.

In theory an asset could be "consumed" in a number of ways.

  1. At a constant rate as it ages.
  2. At an increasing rate as it ages.
  3. At a decreasing rate as it ages.
  4. Randomly.


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External Links & References

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