Pooling can simplify high-volume asset populations, but it changes the unit of account used in the schedule. A group ordinarily contains similar assets; a composite can contain dissimilar assets. In either case, sum annual depreciation for the supported population and divide it by total pool cost to derive the pooled rate. Divide the pool's depreciable amount by its annual depreciation to derive its composite life.
The pool does not erase subledger control. Additions, ordinary retirements, salvage, policy exceptions, and material unusual disposals must remain traceable. A learner should not transplant the ordinary retirement mechanics of a valid pool onto an individually accounted asset or use pooling to hide stale assets. Pooling is an extension topic; the core case retains identified components.
ASC 360-10-35-4 states that the depreciation unit can be a group of assets. The allocation must remain systematic and rational. Paragraph 35-8 names experience factors that can enter a group-life estimate. These paragraphs do not establish that a proposed population is a valid group or composite.
Retain a member register even when the ledger uses a pooled amount. Reconcile member cost to pool cost, member annual depreciation to the pool amount, and each addition or retirement to its evidence. The pooled-rate misconception shows why that register matters. The Linden Peak example leads to independent Quarry Systems practice.
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Understand this concept
- Distinguish group and composite pools, derive a supported pooled rate, and explain how ordinary retirements differ from individual-asset disposal accounting.
Learning resources
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Build on these ideas
- Depreciation method — Apply
To understand this concept: Required. The pooled rate derives from the same cost, residual, life, and allocation mechanics applied across multiple assets.