AIPB Depreciation Exam Practice 2025 – Complete Study Resource

When an asset is revalued, depreciation calculations adjust based on the new value and its remaining useful life. This process reflects the updated worth of the asset in the financial statements and ensures that the depreciation expense accurately represents the current value of the asset over its remaining useful life.

Revaluation is often carried out to reflect fair market value or to adhere to accounting standards. Following a revaluation, the depreciable base of the asset changes, which affects the amount that will be depreciated in future periods. Consequently, the period's depreciation expense will be recalculated using the new valuation of the asset and its remaining useful life. This adjustment allows for more accurate financial reporting and asset management.

Other potential answers do not accurately capture the accounting principles associated with revaluation. For instance, ceasing depreciation entirely or insisting that previous calculations remain unchanged does not align with standard practices. Thus, it is essential to adjust depreciation based on the revalued amount to maintain the integrity and accuracy of the financial records.