What are 'changed circumstances'?

Changed circumstances that could result in your estimate of effective life becoming inaccurate include:

  • your use of the asset turns out to be more or less rigorous than expected
  • the asset is scrapped because of a downturn in demand for the goods or services it is used to produce
  • legislation prevents the asset's continued use
  • new technology makes the asset redundant.


A depreciating asset used to produce insecticide has a remaining effective life of ten years. The government decides that use of the insecticide is to be phased out and legislates to end production within two years. The depreciating asset cannot be used for any other purpose and will, therefore, be scrapped in two years. The effective life of the depreciating asset may then be re-estimated to reflect the loss of eight years of its previously estimated effective life.

End of example
    Last modified: 22 Aug 2016QC 16295