(a) Identify and explain the factors affecting the determination of useful life of the machinery as per Ind AS in view of the facts given in the…

(a) As per Ind AS 16, useful life of an asset is influenced by a combination of technical, commercial, legal, and operational factors. In the case of XYZ Ltd., the relevant factors are: Expected usage of the asset The machine is used in three shifts daily, causing accelerated wear and tear. This reduces the useful life compared to normal industry usage.Expected physical wear and tear Higher usage increases wear, but effective maintenance by skilled staff may extend the useful life compared to industry averages.Technical or commercial obsolescence Rapid technological advancements in the industry may shorten the useful life because the asset may become less efficient earlier than 10 years.Legal or similar limits on use of the asset Environmental regulations restrict usage to 8 years, directly impacting maximum permissible useful life. Accounting treatment of revision in useful life Change in useful life is a change in accounting estimate (Ind AS 16, Para 61; Ind AS 8, Para 36).Such a change is applied prospectively, i.e., depreciation for future periods should be recalculated based on:Revised useful life (say, 8 years from acquisition date),Carrying amount of asset as on the date of revision.Same residual value (unless revised separately) Past depreciation is not restated