As 06

2,106 views

Published on

Published in: Technology, Business
1 Comment
4 Likes
Statistics
Notes
No Downloads
Views
Total views
2,106
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
113
Comments
1
Likes
4
Embeds 0
No embeds

No notes for slide

As 06

  1. 1. ACCOUNTING STANDARD - 6 DEPRECIATION ACCOUNTING J.P., KAPUR & UBERAI
  2. 2. OBJECTIVE <ul><li>DISCLOSURE OF ACCOUNTING POLICY FOR DEPRECIATION FOLLOWED BY AN ENTERPRISE </li></ul>J.P., KAPUR & UBERAI
  3. 3. DEFINITIONS <ul><li>DEPRECIATION Is a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence due to technology and market changes. </li></ul>J.P., KAPUR & UBERAI
  4. 4. DEFINITIONS <ul><li>DEPRECIABLE ASSETS are assets which: </li></ul><ul><ul><ul><li>Used during more than one year </li></ul></ul></ul><ul><ul><ul><li>Have a limited useful life </li></ul></ul></ul><ul><ul><ul><li>Are held by an enterprise for use in : </li></ul></ul></ul><ul><ul><ul><ul><li>the production or supply of goods and services </li></ul></ul></ul></ul><ul><ul><ul><ul><li>for renting to others </li></ul></ul></ul></ul><ul><ul><ul><ul><li>for administrative purposes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>not for the purpose of sale in the ordinary course of business. </li></ul></ul></ul></ul>J.P., KAPUR & UBERAI
  5. 5. DEFINITIONS <ul><li>DEPRECIABLE AMOUNT OF AN ASSET Is its historical cost, or other amount substituted for historical cost in the financial statements, less the estimated residual value. </li></ul><ul><li>Depreciable amount of a depreciable asset should be allocated on a systematic basis to each accounting period during its useful life. </li></ul>J.P., KAPUR & UBERAI
  6. 6. ASSESSMENT OF DEPRECIATION <ul><li>1. Historical cost </li></ul><ul><li>2. Expected useful life of the depreciable asset </li></ul><ul><li>3. Estimated residual value of the </li></ul><ul><li>depreciable asset . </li></ul>J.P., KAPUR & UBERAI
  7. 7. METHODS FOLLOWED <ul><li>1 . STRAIGHTLINE METHOD </li></ul><ul><li>2. WRITTEN DOWN VALUE METHOD If a change in the method of depreciation is made, depreciation is recalculated in accordance with the new method from the date of the asset coming into use. The deficiency or surplus arising from retrospective re-computation is adjusted in the profit and loss account in the year in which the method of depreciation is changed. </li></ul>J.P., KAPUR & UBERAI
  8. 8. DISCLOSURE REQUIREMENTS <ul><li>The historical cost each class of assets; </li></ul><ul><li>Total depreciation for the period. </li></ul><ul><li>The related accumulated depreciation; </li></ul><ul><li>Depreciation methods used; and </li></ul><ul><li>Depreciation rates (only if they are different from the principal rates specified in the statute governing the enterprise.) </li></ul>J.P., KAPUR & UBERAI

×