Consider IAS16/AASB116, Outline alternative views are considered for accounting treatment of depreciation and dscss the rationale for treatment adapt in the standard?

through usage, wear and tear, and obsolescence is progressively brought to account as a periodic charge against income. Two differing views exist as to how depreciation should be measured by accountants: ¸Depreciation could be calculated as the fall in market or fair value of the asset. In other words, depreciation could be calculated as the difference between an asset’s market value (or fair value) at the beginning and end of a period. The decline in the asset’s market or fair value during the period represents depreciation; but if fair values rise then the asset is said to appreciate. This is the valuation approach to depreciation. ¸Depreciation could be measured by allocating the asset’s cost or depreciable amount over its estimated useful life, i.e. the period over which the future economic benefits embodied in the asset are expected to be consumed by the entity. This is referred to as the allocation approach. The allocation approach is favored in IAS/AASB. In other words, depreciation in practice, is measured and recorded using a process of allocating the asset’s cost or depreciable amount, rather than determining current valuations. As the asset is used, its depreciable amount is said to expire gradually