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6. Other wasting assets (that are not chattels)
An example of a wasting asset which is not a chattel is a copyright.
The allowable expenditure is deemed to waste away over the life of the asset on a straight line basis.
When a disposal is made, the allowable expenditure is restricted to take account of the assets
natural fall in value. This fall in value is deemed to occur on a straight line basis over its predictable
useful life.
Therefore to compute the allowable cost the original cost must therefore be reduced BY
where:
P = Period of ownership of seller
L = Predictable Life of asset on acquisition
C = Cost of the asset
S = Scrap / residual value at the end of the assets’ predictable life
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