This document outlines accounting standards regarding depreciation accounting. It defines key terms like depreciation, depreciable assets, useful life, and depreciable amount. It explains that depreciation is based on historical cost, useful life, and residual value. It discusses factors that determine useful life and methods for allocating depreciation over useful life, like the straight-line method. It also covers disclosure requirements and treatment when the depreciation method is changed.
This document summarizes the key points of the Accounting Standard (AS) 6 on depreciation accounting issued by the Institute of Chartered Accountants of India. It defines depreciation as the wearing out or loss of value of an asset due to use, time, or obsolescence. It outlines factors to consider in determining depreciation such as historical cost, useful life, and residual value of assets. Common depreciation methods like straight-line and reducing balance are discussed. Disclosure requirements for depreciation policies, calculations, and any changes are also covered.
As 06 depreciation accounting 1994 20080928Rahul Bandri
- The document provides guidance on accounting for depreciation of assets. It defines key terms like depreciation, depreciable assets, useful life, and depreciable amount.
- It discusses factors to consider in determining depreciation charges like historical cost, useful life, and residual value of assets. It also describes common depreciation methods and disclosure requirements.
- The standard specifies that depreciation should be allocated systematically over an asset's useful life and the method used should be consistent and changed only under certain conditions. It provides guidance on estimating useful lives and accounting for changes in estimates.
This document provides guidance on accounting standards for depreciation accounting. It defines key terms like depreciation, depreciable assets, useful life, and depreciable amount. It explains factors to consider in assessing depreciation such as historical cost, useful life, and residual value of assets. It discusses different methods for allocating depreciation over an asset's useful life, and notes that management selects the most appropriate method based on factors like asset type and use. The standard is mandatory for accounting periods beginning on or after April 1, 1995.
How to evaluate Oil and Gas Company’s Performance & Stock InvestmentHamdy Rashed
1) Reserves measurements impact financial statements such as DD&A, revenue, costs and impairment. Disclosure of reserves is important for internal and external users but there are differences between GAAPs.
2) Various ratios such as reserve replacement, reserve life and finding cost are used to evaluate performance and efficiency. Reserves also impact stock price and investment decisions.
3) Fair value of assets and stocks consider disclosures like standardized measure of discounted future cash flows from proved reserves under different GAAPs. Various ratios also help investors compare companies.
Ias 16 property plant and equipment-presentationShadabAhmadFaiq
The document discusses the key aspects of IAS 16 Property, Plant and Equipment including:
- The objective is to prescribe the accounting treatment for property, plant and equipment.
- Scope outlines what is excluded like IFRS 5 and IAS 40.
- Definitions for terms like PPE, carrying amount, depreciation.
- Recognition criteria that future benefits are probable and cost can be reliably measured.
- Measurement includes initial cost and subsequent cost model or revaluation model.
- Depreciation is systematically allocated over useful life.
- Impairment is assessed using IAS 36.
- Derecognition occurs from disposal or no future benefits are expected.
Petroleum accounting for tangible and intangible costsHamdy Rashed
1) Tangible drilling costs such as casing, tubing, and wellheads installed in exploratory wells should be capitalized temporarily until reserves are determined. If reserves are found, they become long-term assets; if not, they are expensed.
2) Development well tangible costs are capitalized regardless of the outcome. Support equipment used for multiple wells are also capitalized as long-term assets and depreciated over their useful lives.
3) Drilling materials purchases can be directly expensed to well costs or stored as inventory. Direct expensing is preferred if materials needs are relatively stable and lead times are reasonable.
This document provides an overview and summary of MFRS 133 Earnings per Share. It discusses the following key points:
- MFRS 133 is equivalent to IAS 33 Earnings per Share and was issued by the Malaysian Accounting Standards Board in November 2011.
- The standard provides guidance on calculating and presenting both basic and diluted earnings per share amounts.
- Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
- Diluted EPS is calculated similarly but adjusts the profit or loss and shares for all dilutive potential ordinary shares.
- The standard defines key terms used and provides guidance on calculating earnings
This document summarizes the key points of the Accounting Standard (AS) 6 on depreciation accounting issued by the Institute of Chartered Accountants of India. It defines depreciation as the wearing out or loss of value of an asset due to use, time, or obsolescence. It outlines factors to consider in determining depreciation such as historical cost, useful life, and residual value of assets. Common depreciation methods like straight-line and reducing balance are discussed. Disclosure requirements for depreciation policies, calculations, and any changes are also covered.
As 06 depreciation accounting 1994 20080928Rahul Bandri
- The document provides guidance on accounting for depreciation of assets. It defines key terms like depreciation, depreciable assets, useful life, and depreciable amount.
- It discusses factors to consider in determining depreciation charges like historical cost, useful life, and residual value of assets. It also describes common depreciation methods and disclosure requirements.
- The standard specifies that depreciation should be allocated systematically over an asset's useful life and the method used should be consistent and changed only under certain conditions. It provides guidance on estimating useful lives and accounting for changes in estimates.
This document provides guidance on accounting standards for depreciation accounting. It defines key terms like depreciation, depreciable assets, useful life, and depreciable amount. It explains factors to consider in assessing depreciation such as historical cost, useful life, and residual value of assets. It discusses different methods for allocating depreciation over an asset's useful life, and notes that management selects the most appropriate method based on factors like asset type and use. The standard is mandatory for accounting periods beginning on or after April 1, 1995.
How to evaluate Oil and Gas Company’s Performance & Stock InvestmentHamdy Rashed
1) Reserves measurements impact financial statements such as DD&A, revenue, costs and impairment. Disclosure of reserves is important for internal and external users but there are differences between GAAPs.
2) Various ratios such as reserve replacement, reserve life and finding cost are used to evaluate performance and efficiency. Reserves also impact stock price and investment decisions.
3) Fair value of assets and stocks consider disclosures like standardized measure of discounted future cash flows from proved reserves under different GAAPs. Various ratios also help investors compare companies.
Ias 16 property plant and equipment-presentationShadabAhmadFaiq
The document discusses the key aspects of IAS 16 Property, Plant and Equipment including:
- The objective is to prescribe the accounting treatment for property, plant and equipment.
- Scope outlines what is excluded like IFRS 5 and IAS 40.
- Definitions for terms like PPE, carrying amount, depreciation.
- Recognition criteria that future benefits are probable and cost can be reliably measured.
- Measurement includes initial cost and subsequent cost model or revaluation model.
- Depreciation is systematically allocated over useful life.
- Impairment is assessed using IAS 36.
- Derecognition occurs from disposal or no future benefits are expected.
Petroleum accounting for tangible and intangible costsHamdy Rashed
1) Tangible drilling costs such as casing, tubing, and wellheads installed in exploratory wells should be capitalized temporarily until reserves are determined. If reserves are found, they become long-term assets; if not, they are expensed.
2) Development well tangible costs are capitalized regardless of the outcome. Support equipment used for multiple wells are also capitalized as long-term assets and depreciated over their useful lives.
3) Drilling materials purchases can be directly expensed to well costs or stored as inventory. Direct expensing is preferred if materials needs are relatively stable and lead times are reasonable.
This document provides an overview and summary of MFRS 133 Earnings per Share. It discusses the following key points:
- MFRS 133 is equivalent to IAS 33 Earnings per Share and was issued by the Malaysian Accounting Standards Board in November 2011.
- The standard provides guidance on calculating and presenting both basic and diluted earnings per share amounts.
- Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
- Diluted EPS is calculated similarly but adjusts the profit or loss and shares for all dilutive potential ordinary shares.
- The standard defines key terms used and provides guidance on calculating earnings
Cost management and performance evaluation in petroleum upstream industry part bHamdy Rashed
Cost control and management is not appropriate only for manufacturing and commercial industry;
cost management is applied in upstream industry such as Petroleum exploration, development and
production cost. Many Petroleum Companies don’t pay more attention to cost control and
especially during exploration phase except if Companies face financial dilemma, declining
production or if they see they cannot meet their planned schedule of Capital program that lead
them to not meet their obligation, commitments and required return, therefore, they start
considering cost reduction or control. This paper provide management accountant, cost controller,
financial controller, financial manager, internal auditor and cost recovery auditor with brief of cost
control, how cost is analyzed and managed and performance is measured in Petroleum upstream
industry.
IAS 16 provides guidance on accounting for property, plant and equipment. It requires initial recognition of assets at cost and subsequent measurement using either the cost model or revaluation model. It also provides guidance on depreciation, derecognition, and disclosures of property, plant and equipment. Some key differences from Indian GAAP include requirements for regular revaluation, a component approach for depreciation, and capitalization of certain subsequent expenditures.
Investment and decision analysis for petroleum explorationHamdy Rashed
Investment and decision analysis for petroleum exploration is a subject that many explorationist, geologist, management accountant and finance manager likes to know about. This paper shows the major concepts of how investment, decision and project analysis is made for petroleum exploration in financial view that is based on cash-flow models and applying capital budgeting techniques per International Oil and Gas business, financial and contractual arrangement that impact on such analysis. This paper does not cover such analysis in technically view because it is out of specialization, but this analysis shall be made in conjunction with technical experienced staff.
Keywords: Investment and decision analysis for petroleum exploration, Project Analysis for Petroleum Exploration
This document summarizes Accounting Standard 6 on depreciation accounting in India. It defines depreciation and outlines the key aspects of depreciation accounting such as depreciable assets, useful life, methods of calculating depreciation, and changes in depreciation rates. The standard provides guidance on determining depreciable amounts, selecting depreciation methods, calculating depreciation on additions/extensions, and disclosure requirements for depreciation in financial statements.
Petroleum cost in petroleum upstream industry p1Hamdy Rashed
This document discusses accounting for acquisition, exploration, development, and decommissioning costs for oil and gas companies under GAAP, IFRS, and production sharing contracts. It outlines criteria for capitalizing versus expensing various costs such as acquisition costs, exploration well costs, development well costs, operating costs, and decommissioning costs. It also discusses treatment of costs related to incremental drilling depth, appraisal wells, and delineation of proved versus unproved reserves areas. Technical information and production sharing contract terms are important to properly classify costs as capital or expense.
Cost management and performance measurements for petroleum upstream industr p...Hamdy Rashed
Cost management and Balanced Scorecard is not appropriate only for manufacturing and commercial industry; cost management is applied in upstream industry such as Petroleum exploration, development and production cost. Many Petroleum Companies don’t pay more attention to cost control or balanced scorecard and especially during exploration phase or small companies except if Companies face financial dilemma, declining production or if they see they cannot meet their planned schedule of Capital program that lead them to not meet their obligation, commitments and required return, therefore, they start considering cost reduction or control. This paper provide management accountant, cost controller, financial controller, financial manager, internal auditor and cost recovery auditor with brief of cost control, how cost is analyzed and managed and performance is measured in Petroleum upstream industry.
Revaluation of fixed assets involves adjusting the recorded value of a company's capital goods like machines, buildings, and patents to reflect their true market value. This is distinct from regular depreciation which ties asset value decline to age. Reasons for revaluation include showing accurate rates of return, maintaining adequate replacement funds, and negotiating fair sale prices. Common revaluation methods include indexation against cost inflation, appraising current market prices, and hiring experts. Any increase in value is recorded in a revaluation reserve rather than profits to avoid overstating earnings.
This document discusses the Multi-Period Excess Earnings Method (MPEEM) of valuing mineral reserves. MPEEM is an evolution of the residual technique, where the value of a business is determined by forecasting cash flows and subtracting the values of other contributing assets. MPEEM improves on this by deducting not just the value but also an estimated return on the assets. The document outlines the MPEEM calculation components and provides an example application to value the reserves of a large coal company during an acquisition.
The document provides information about auditing inventories and property, plant and equipment. It outlines the key audit objectives, which are to ensure inventories and PPE exist, are owned by the client, and are properly valued. It describes procedures for observing inventory counts, verifying pricing, and designing substantive audit programs for PPE. Analytical procedures and tests of details of transactions and balances are discussed for both inventories and PPE.
This document provides notes to the consolidated financial statements of Anheuser-Busch Companies and Subsidiaries. It summarizes the company's significant accounting policies, including principles of consolidation, revenue recognition, foreign currency translation, valuation of securities, cash, inventories, fixed assets, intangible assets, delivery costs, advertising costs, financial derivatives, stock-based compensation, and income taxes. The notes also provide details on the composition of certain financial statement line items such as plant and equipment, changes in intangible assets, and the pro forma impact of expensing stock options.
Corporate Reporting - MFRS116, IAS16 Property Plant and Equipment_PPEDayana Mastura FCCA CA
This document discusses MFRS116 - Property, Plant and Equipment. It defines PPE and outlines the standard's scope and exceptions. PPE must meet definitions of an asset to be recognized initially at cost. Subsequent measurement can be under the cost or revaluation model. The document explains initial and subsequent measurement, self-construction, exchanges, derecognition and disclosure requirements under MFRS116 for PPE.
The document discusses different types of audits. It defines statutory audit as a compulsory audit prescribed by law for certain organizations like companies, banks, insurance companies, and co-operative societies. Government audit covers the audit of government funds and public enterprises. Non-statutory or private audits are voluntary and terms are agreed between the auditor and client. Other types discussed include sole proprietorship and partnership audits, as well as operational, management, and social audits.
This document outlines Accounting Standard 20 on earnings per share (EPS) in India. It provides definitions and guidelines for calculating basic EPS and diluted EPS. Basic EPS is calculated by dividing net profit by the weighted average number of outstanding shares. Diluted EPS is also required to be disclosed, though small and medium companies are exempt from this requirement. The standard aims to improve comparability of financial performance across companies and periods.
The document provides an overview of Accounting Standard 6 (AS-6) on Depreciation Accounting and Accounting Standard 28 (AS-28) on Impairment of Assets. AS-6 deals with the disclosure of accounting policies for depreciation and defines depreciable assets. AS-28 introduces the concept of impairment of assets below their carrying amount and provides indicators and methods for calculating impairment losses. Key terms like carrying amount and recoverable amount are also defined related to impairment assessment of assets.
This document discusses SLAuS 210 which deals with an auditor's responsibilities in agreeing the terms of an audit engagement with management. It covers establishing preconditions for an audit, the objective to accept an audit only when terms are agreed, and confirming common understanding of the engagement terms. It also provides guidance on the contents of an audit engagement letter, factors to consider regarding the acceptability of the financial reporting framework, management's responsibilities for internal controls and financial statement preparation, and addressing changes to engagement terms.
This document outlines accounting standards for intangible fixed assets in Vietnam. It defines key terms like intangible fixed assets, research, development, historical cost, and useful life. It provides guidance on recognizing and determining the initial value of intangible assets, including those purchased separately, through business mergers, allocated by the state, or created internally. Costs are to be capitalized for intangible assets that meet the definition and recognition criteria, while costs incurred in the research stage of internal projects are expensed. The document provides detailed rules for classifying and recording various types of intangible assets.
This standard deals with the auditor's responsibilities regarding going concern in a financial statement audit. It outlines key concepts like indicators of going concern issues, management's responsibilities in assessing going concern, and the auditor's responsibilities in evaluating management's assessment. The auditor must consider whether events or conditions cast doubt on going concern and obtain sufficient evidence to conclude on the appropriateness of using the going concern assumption. The standard also provides guidance on implications for the auditor's report depending on whether use of the going concern basis is appropriate, questionable, or inappropriate.
This document summarizes key concepts related to accounting for long-lived assets. It explains that plant assets should be recorded at cost and depreciated over their useful lives using methods like straight-line or declining-balance. Depreciation is allocated to expense the asset's cost over its useful life. When assets are disposed, any difference between book value and proceeds is recorded as a gain or loss. Ratios can evaluate asset usage. Intangible assets with limited lives are amortized, while those with indefinite lives are not.
The document discusses the straight-line depreciation method. It allocates the same amount of depreciation expense each reporting period. To calculate straight-line depreciation, you need the cost, residual value, and useful life of the asset. The formula is Depreciation Expense = (Cost - Residual Value) / Useful Life. An example calculates depreciation expense of $2,400 per year for a van costing $16,000 over 4 years with a residual value of $6,400. The method can also be expressed as a percentage by dividing the annual depreciation expense by the original cost.
A presentation outlining the reducing balance method for depreciation. This is a new skill required of VCE students in the new VCE Accounting Study Design and attempts to explain the concept in plain English.
Accounting depreciation - Initial balances and ongoing capital expenditure (This guide replaces the guide - Advanced depreciation using SUMIF)
Ongoing capital expenditure programmes give rise to modelling challenges when it comes to accounting depreciation. Care must be taken since assets start and stop depreciating at different times.
In this guide, we will also consider how to model accounting depreciation relating to a partially depreciated initial balance.
Cost management and performance evaluation in petroleum upstream industry part bHamdy Rashed
Cost control and management is not appropriate only for manufacturing and commercial industry;
cost management is applied in upstream industry such as Petroleum exploration, development and
production cost. Many Petroleum Companies don’t pay more attention to cost control and
especially during exploration phase except if Companies face financial dilemma, declining
production or if they see they cannot meet their planned schedule of Capital program that lead
them to not meet their obligation, commitments and required return, therefore, they start
considering cost reduction or control. This paper provide management accountant, cost controller,
financial controller, financial manager, internal auditor and cost recovery auditor with brief of cost
control, how cost is analyzed and managed and performance is measured in Petroleum upstream
industry.
IAS 16 provides guidance on accounting for property, plant and equipment. It requires initial recognition of assets at cost and subsequent measurement using either the cost model or revaluation model. It also provides guidance on depreciation, derecognition, and disclosures of property, plant and equipment. Some key differences from Indian GAAP include requirements for regular revaluation, a component approach for depreciation, and capitalization of certain subsequent expenditures.
Investment and decision analysis for petroleum explorationHamdy Rashed
Investment and decision analysis for petroleum exploration is a subject that many explorationist, geologist, management accountant and finance manager likes to know about. This paper shows the major concepts of how investment, decision and project analysis is made for petroleum exploration in financial view that is based on cash-flow models and applying capital budgeting techniques per International Oil and Gas business, financial and contractual arrangement that impact on such analysis. This paper does not cover such analysis in technically view because it is out of specialization, but this analysis shall be made in conjunction with technical experienced staff.
Keywords: Investment and decision analysis for petroleum exploration, Project Analysis for Petroleum Exploration
This document summarizes Accounting Standard 6 on depreciation accounting in India. It defines depreciation and outlines the key aspects of depreciation accounting such as depreciable assets, useful life, methods of calculating depreciation, and changes in depreciation rates. The standard provides guidance on determining depreciable amounts, selecting depreciation methods, calculating depreciation on additions/extensions, and disclosure requirements for depreciation in financial statements.
Petroleum cost in petroleum upstream industry p1Hamdy Rashed
This document discusses accounting for acquisition, exploration, development, and decommissioning costs for oil and gas companies under GAAP, IFRS, and production sharing contracts. It outlines criteria for capitalizing versus expensing various costs such as acquisition costs, exploration well costs, development well costs, operating costs, and decommissioning costs. It also discusses treatment of costs related to incremental drilling depth, appraisal wells, and delineation of proved versus unproved reserves areas. Technical information and production sharing contract terms are important to properly classify costs as capital or expense.
Cost management and performance measurements for petroleum upstream industr p...Hamdy Rashed
Cost management and Balanced Scorecard is not appropriate only for manufacturing and commercial industry; cost management is applied in upstream industry such as Petroleum exploration, development and production cost. Many Petroleum Companies don’t pay more attention to cost control or balanced scorecard and especially during exploration phase or small companies except if Companies face financial dilemma, declining production or if they see they cannot meet their planned schedule of Capital program that lead them to not meet their obligation, commitments and required return, therefore, they start considering cost reduction or control. This paper provide management accountant, cost controller, financial controller, financial manager, internal auditor and cost recovery auditor with brief of cost control, how cost is analyzed and managed and performance is measured in Petroleum upstream industry.
Revaluation of fixed assets involves adjusting the recorded value of a company's capital goods like machines, buildings, and patents to reflect their true market value. This is distinct from regular depreciation which ties asset value decline to age. Reasons for revaluation include showing accurate rates of return, maintaining adequate replacement funds, and negotiating fair sale prices. Common revaluation methods include indexation against cost inflation, appraising current market prices, and hiring experts. Any increase in value is recorded in a revaluation reserve rather than profits to avoid overstating earnings.
This document discusses the Multi-Period Excess Earnings Method (MPEEM) of valuing mineral reserves. MPEEM is an evolution of the residual technique, where the value of a business is determined by forecasting cash flows and subtracting the values of other contributing assets. MPEEM improves on this by deducting not just the value but also an estimated return on the assets. The document outlines the MPEEM calculation components and provides an example application to value the reserves of a large coal company during an acquisition.
The document provides information about auditing inventories and property, plant and equipment. It outlines the key audit objectives, which are to ensure inventories and PPE exist, are owned by the client, and are properly valued. It describes procedures for observing inventory counts, verifying pricing, and designing substantive audit programs for PPE. Analytical procedures and tests of details of transactions and balances are discussed for both inventories and PPE.
This document provides notes to the consolidated financial statements of Anheuser-Busch Companies and Subsidiaries. It summarizes the company's significant accounting policies, including principles of consolidation, revenue recognition, foreign currency translation, valuation of securities, cash, inventories, fixed assets, intangible assets, delivery costs, advertising costs, financial derivatives, stock-based compensation, and income taxes. The notes also provide details on the composition of certain financial statement line items such as plant and equipment, changes in intangible assets, and the pro forma impact of expensing stock options.
Corporate Reporting - MFRS116, IAS16 Property Plant and Equipment_PPEDayana Mastura FCCA CA
This document discusses MFRS116 - Property, Plant and Equipment. It defines PPE and outlines the standard's scope and exceptions. PPE must meet definitions of an asset to be recognized initially at cost. Subsequent measurement can be under the cost or revaluation model. The document explains initial and subsequent measurement, self-construction, exchanges, derecognition and disclosure requirements under MFRS116 for PPE.
The document discusses different types of audits. It defines statutory audit as a compulsory audit prescribed by law for certain organizations like companies, banks, insurance companies, and co-operative societies. Government audit covers the audit of government funds and public enterprises. Non-statutory or private audits are voluntary and terms are agreed between the auditor and client. Other types discussed include sole proprietorship and partnership audits, as well as operational, management, and social audits.
This document outlines Accounting Standard 20 on earnings per share (EPS) in India. It provides definitions and guidelines for calculating basic EPS and diluted EPS. Basic EPS is calculated by dividing net profit by the weighted average number of outstanding shares. Diluted EPS is also required to be disclosed, though small and medium companies are exempt from this requirement. The standard aims to improve comparability of financial performance across companies and periods.
The document provides an overview of Accounting Standard 6 (AS-6) on Depreciation Accounting and Accounting Standard 28 (AS-28) on Impairment of Assets. AS-6 deals with the disclosure of accounting policies for depreciation and defines depreciable assets. AS-28 introduces the concept of impairment of assets below their carrying amount and provides indicators and methods for calculating impairment losses. Key terms like carrying amount and recoverable amount are also defined related to impairment assessment of assets.
This document discusses SLAuS 210 which deals with an auditor's responsibilities in agreeing the terms of an audit engagement with management. It covers establishing preconditions for an audit, the objective to accept an audit only when terms are agreed, and confirming common understanding of the engagement terms. It also provides guidance on the contents of an audit engagement letter, factors to consider regarding the acceptability of the financial reporting framework, management's responsibilities for internal controls and financial statement preparation, and addressing changes to engagement terms.
This document outlines accounting standards for intangible fixed assets in Vietnam. It defines key terms like intangible fixed assets, research, development, historical cost, and useful life. It provides guidance on recognizing and determining the initial value of intangible assets, including those purchased separately, through business mergers, allocated by the state, or created internally. Costs are to be capitalized for intangible assets that meet the definition and recognition criteria, while costs incurred in the research stage of internal projects are expensed. The document provides detailed rules for classifying and recording various types of intangible assets.
This standard deals with the auditor's responsibilities regarding going concern in a financial statement audit. It outlines key concepts like indicators of going concern issues, management's responsibilities in assessing going concern, and the auditor's responsibilities in evaluating management's assessment. The auditor must consider whether events or conditions cast doubt on going concern and obtain sufficient evidence to conclude on the appropriateness of using the going concern assumption. The standard also provides guidance on implications for the auditor's report depending on whether use of the going concern basis is appropriate, questionable, or inappropriate.
This document summarizes key concepts related to accounting for long-lived assets. It explains that plant assets should be recorded at cost and depreciated over their useful lives using methods like straight-line or declining-balance. Depreciation is allocated to expense the asset's cost over its useful life. When assets are disposed, any difference between book value and proceeds is recorded as a gain or loss. Ratios can evaluate asset usage. Intangible assets with limited lives are amortized, while those with indefinite lives are not.
The document discusses the straight-line depreciation method. It allocates the same amount of depreciation expense each reporting period. To calculate straight-line depreciation, you need the cost, residual value, and useful life of the asset. The formula is Depreciation Expense = (Cost - Residual Value) / Useful Life. An example calculates depreciation expense of $2,400 per year for a van costing $16,000 over 4 years with a residual value of $6,400. The method can also be expressed as a percentage by dividing the annual depreciation expense by the original cost.
A presentation outlining the reducing balance method for depreciation. This is a new skill required of VCE students in the new VCE Accounting Study Design and attempts to explain the concept in plain English.
Accounting depreciation - Initial balances and ongoing capital expenditure (This guide replaces the guide - Advanced depreciation using SUMIF)
Ongoing capital expenditure programmes give rise to modelling challenges when it comes to accounting depreciation. Care must be taken since assets start and stop depreciating at different times.
In this guide, we will also consider how to model accounting depreciation relating to a partially depreciated initial balance.
This document defines and explains various accounting concepts related to asset valuation over time. It defines depreciation as a non-cash expense that reduces the value of an asset over its useful life. It then describes different depreciation calculation methods like straight-line, sum-of-years digits, and declining balance. The document also discusses amortization, write-offs, and sinking funds which are methods used to allocate capital costs over a period of time. Examples are provided to illustrate how to calculate depreciation and amortization using different formulas and rates.
This document discusses accounting standards for depreciation accounting in India. It explains that depreciation is a measure of the wearing out or loss of value of an asset over its useful life. It then describes different methods for calculating depreciation, including straight-line, written down value, and units of production. Journal entries are provided for recording depreciation expense and the disposal of assets. The document concludes by stating that this standard applies to all depreciable assets except certain items, and disclosure of depreciation policies is important.
This document defines depreciation as the reduction in the value of an asset due to wear and tear, usage, or obsolescence over time. It discusses the allocation of an asset's cost over its useful life, with depreciation being a non-cash expense. Various methods of calculating depreciation are presented, along with factors that determine the depreciation amount such as the asset's cost, useful life, and salvage value. The document also notes disclosure requirements for depreciation in financial statements and regulations around changing depreciation methods.
This document discusses depreciation, including its concept, objectives, causes, and methods. It defines depreciation as the permanent fall in value of fixed assets due to wear and tear from use in business. The objectives of depreciation include calculating proper profits, maintaining the original investment, and providing for asset replacement. Causes include wear and tear, obsolescence, and the passage of time. Common depreciation methods discussed are the straight-line method, declining balance method, and sum of years digits method.
This document outlines accounting standards for depreciation accounting. It defines key terms like depreciation, depreciable assets, useful life, and depreciable amount. It discusses factors that determine depreciation charges like historical cost, useful life, and residual value. Common depreciation methods like straight-line and reducing balance are described. The standard also addresses disclosure requirements and changes to depreciation methods.
This document provides an overview of Accounting Standard 6 on depreciation accounting in India. It discusses the applicability of depreciation accounting, the concept and calculation of depreciation, methods for charging depreciation, disclosures required, and clarifies some queries around depreciation of low value assets and land leases. The standard aims to provide guidance on a systematic allocation of the depreciable amount of an asset over its useful life.
This document discusses depreciation accounting. It defines depreciation accounting as allocating the cost of a tangible capital asset over its estimated useful life. Depreciation represents the gradual conversion of the asset's capitalized cost into an expense that is allocated to different periods. The document discusses different terms used for allocating costs of different asset types, such as depreciation for physical assets, depletion for natural resources, and amortization for intangible assets. It also discusses factors that influence the amount of depreciation charged each year, such as original cost, estimated useful life, additions made to the asset, and estimated residual value.
1) The document discusses depreciation accounting, including definitions, objectives, factors affecting depreciation amounts, and methods of calculating depreciation.
2) The two most common depreciation methods are the straight-line method, which allocates equal amounts of depreciation each period, and the reducing balance method, which allocates higher amounts initially that decrease over time.
3) Other topics covered include accounting entries for depreciation, illustrations of depreciation calculations using different methods, and the sum-of-years digits method.
This document provides an overview of depreciation accounting. It defines depreciation as the permanent decrease in the value of an asset due to factors like wear and tear, obsolescence, or the passage of time. The document outlines various causes of depreciation including wear and tear, exhaustion, effluxion of time, weather effects, and permanent declines in asset value. It also discusses objectives of recording depreciation such as correctly calculating profits, complying with legal requirements, and maintaining the integrity of capital. Finally, the document introduces different depreciation methods used in accounting like the straight-line method, declining balance method, and annuity method.
This document provides an overview of depreciation accounting. It defines depreciation and related terms like depletion, amortization, and obsolescence. It discusses the causes and objectives of charging depreciation. The document also explains factors affecting depreciation amounts and relevant accounting principles. Finally, it describes the straight line and written down value methods for allocating depreciation over the useful life of an asset.
The document discusses the key aspects of Ind AS 16 regarding the accounting treatment of property, plant, and equipment. It covers topics such as:
- Timing of recognizing assets and determining carrying amounts
- Components of asset cost and subsequent costs
- Depreciation methods and impairment
- Useful life and residual value definitions
- Recognition, measurement, and derecognition of property, plant, and equipment
The document provides definitions of important terms related to property, plant, and equipment accounting and outlines the objectives, scope, and applicability of Ind AS 16.
The document summarizes Accounting Standard 6 regarding depreciation accounting in India. It defines depreciation as the wearing out or loss of value of an asset due to use over time. Depreciable assets must be used for more than one accounting period and have a limited useful life. The standard outlines acceptable depreciation methods like straight-line and written down value. It specifies when a change in depreciation method is appropriate and how to account for it. The document also discusses factors to consider in determining an asset's useful life and residual value for depreciation purposes.
This document provides information about accounting for fixed assets and depreciation. It defines depreciation as a measure of the wearing out of an asset's value from use over time. Depreciable assets must be used for more than one period and have a limited useful life. Depreciation is calculated based on the historical cost, useful life, and estimated residual value of an asset. Common depreciation methods include straight-line and declining balance. The document also compares depreciation standards between AS-6, GAAP, and IAS-16.
This document discusses 9 issues related to the accounting standard AS 6 on depreciation accounting in India. It addresses questions on which assets depreciation does not apply to, factors considered in computing depreciation, circumstances impacting useful life, requirements for changing depreciation methods, implications of asset revaluation, and more. Key points covered include that depreciation must be provided annually regardless of increased market value, schedules may require higher depreciation rates if useful life is shorter than estimated, and revalued assets require depreciation based on remaining useful life, not scheduled rates.
This document discusses depreciation, which refers to the decline in value of fixed assets over time due to usage, age, or obsolescence. Depreciation is a non-cash expense that is allocated over the useful life of an asset to match the cost of the asset with the periods in which it provides benefits. It is necessary to account for depreciation to arrive at accurate profit figures and reflects the expired cost associated with the usage of a fixed asset. The document also discusses the meaning and methods of calculating depreciation according to accounting standards.
The document discusses depreciation, which is the decline in the value of fixed assets over time due to use, age, or obsolescence. Depreciation is accounted for for tax and profit purposes by allocating the cost of the asset over its useful life. It ensures that the costs are matched to the periods that benefit from use of the asset. Common methods to calculate depreciation include straight-line and written down value. The document also discusses the need to create provisions and reserves to cover uncertain costs and retain profits for future needs.
The document discusses depreciation, which is the decline in the value of fixed assets over time due to factors like usage, age, and obsolescence. It notes that depreciation is needed to match expenses to the periods that benefits are derived from assets. Depreciation is calculated based on the cost of the asset, its expected useful life, and estimated salvage value. Common methods to calculate depreciation include straight-line and written down value. The document also distinguishes depreciation from similar concepts like depletion and amortization.
This document provides an overview of Accounting Standard 10 (AS 10) regarding accounting for fixed assets in India. AS 10 applies to companies listed on a recognized stock exchange and large commercial enterprises. It defines fixed assets as assets used for producing goods and services, not held for sale. It discusses the components that make up the cost of a fixed asset, treatment of improvements and repairs, and disclosure requirements regarding fixed assets in financial statements.
This document outlines accounting standards for inventory valuation. It discusses determining the cost of inventories, including costs of purchase, conversion, and other costs. It also addresses calculating inventory costs using specific identification, FIFO, or weighted average cost formulas. The standard requires inventories to be valued at the lower of cost or net realizable value.
- The document defines terms related to accounting for tangible fixed assets such as historical cost, depreciation, useful life, and liquidation value.
- To be recognized as a tangible fixed asset, an asset must meet four criteria: provide future economic benefits, have a reliably determined historical cost, have an estimated useful life of over one year, and meet value criteria under current regulations.
- Tangible fixed assets are classified into groups like buildings, machinery, vehicles, and more based on their nature and use. Their recognition as assets or expenses affects financial reporting.
The document discusses accounting standards for long-lived assets, including intangible assets. It notes that intangible assets are nonphysical assets that provide future economic benefits. The standard provides guidance on recognizing, measuring, and disclosing intangangible assets. It also discusses impairment testing of intangible assets to ensure they are carried at recoverable amounts. The standard applies to identifiable intangible assets and goodwill, but not to internally generated goodwill or brands.
The document discusses Indian accounting standards, including the meaning and benefits of accounting standards. It provides details on several specific accounting standards such as AS1 on disclosure of accounting policies, AS6 on depreciation accounting, AS9 on revenue recognition, and AS10 on accounting for fixed assets. The standards cover topics such as selection and disclosure of accounting policies, methods of depreciation, timing of revenue recognition, calculation of costs of fixed assets, and revaluation of fixed assets. The overall objective of the accounting standards is to standardize different accounting policies and practices in India.
This document discusses depreciation accounting under Indian Accounting Standard AS-6, US GAAP, and IFRS. It defines depreciation and outlines the key differences between the three standards. AS-6 allows revaluation of assets while GAAP prohibits it. A change in depreciation method is treated as a change in accounting policy under AS-6 and GAAP, but as a change in estimates under IFRS. IFRS also allows use of a revaluation model where assets can be revalued to fair market value.
Let's Integrate MuleSoft RPA, COMPOSER, APM with AWS IDP along with Slackshyamraj55
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In the rapidly evolving landscape of technologies, XML continues to play a vital role in structuring, storing, and transporting data across diverse systems. The recent advancements in artificial intelligence (AI) present new methodologies for enhancing XML development workflows, introducing efficiency, automation, and intelligent capabilities. This presentation will outline the scope and perspective of utilizing AI in XML development. The potential benefits and the possible pitfalls will be highlighted, providing a balanced view of the subject.
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Webinar: Designing a schema for a Data WarehouseFederico Razzoli
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HCL Notes und Domino Lizenzkostenreduzierung in der Welt von DLAUpanagenda
Webinar Recording: https://www.panagenda.com/webinars/hcl-notes-und-domino-lizenzkostenreduzierung-in-der-welt-von-dlau/
DLAU und die Lizenzen nach dem CCB- und CCX-Modell sind für viele in der HCL-Community seit letztem Jahr ein heißes Thema. Als Notes- oder Domino-Kunde haben Sie vielleicht mit unerwartet hohen Benutzerzahlen und Lizenzgebühren zu kämpfen. Sie fragen sich vielleicht, wie diese neue Art der Lizenzierung funktioniert und welchen Nutzen sie Ihnen bringt. Vor allem wollen Sie sicherlich Ihr Budget einhalten und Kosten sparen, wo immer möglich. Das verstehen wir und wir möchten Ihnen dabei helfen!
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See how organizational priorities and strategic approaches to data security and privacy are evolving around the globe.
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Salesforce Integration for Bonterra Impact Management (fka Social Solutions A...Jeffrey Haguewood
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We believe integration and automation are essential to user experience and the promise of efficient work through technology. Automation is the critical ingredient to realizing that full vision. We develop integration products and services for Bonterra Case Management software to support the deployment of automations for a variety of use cases.
This video focuses on integration of Salesforce with Bonterra Impact Management.
Interested in deploying an integration with Salesforce for Bonterra Impact Management? Contact us at sales@sidekicksolutionsllc.com to discuss next steps.
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Ivanti’s Patch Tuesday breakdown goes beyond patching your applications and brings you the intelligence and guidance needed to prioritize where to focus your attention first. Catch early analysis on our Ivanti blog, then join industry expert Chris Goettl for the Patch Tuesday Webinar Event. There we’ll do a deep dive into each of the bulletins and give guidance on the risks associated with the newly-identified vulnerabilities.
Driving Business Innovation: Latest Generative AI Advancements & Success StorySafe Software
Are you ready to revolutionize how you handle data? Join us for a webinar where we’ll bring you up to speed with the latest advancements in Generative AI technology and discover how leveraging FME with tools from giants like Google Gemini, Amazon, and Microsoft OpenAI can supercharge your workflow efficiency.
During the hour, we’ll take you through:
Guest Speaker Segment with Hannah Barrington: Dive into the world of dynamic real estate marketing with Hannah, the Marketing Manager at Workspace Group. Hear firsthand how their team generates engaging descriptions for thousands of office units by integrating diverse data sources—from PDF floorplans to web pages—using FME transformers, like OpenAIVisionConnector and AnthropicVisionConnector. This use case will show you how GenAI can streamline content creation for marketing across the board.
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Main news related to the CCS TSI 2023 (2023/1695)Jakub Marek
An English 🇬🇧 translation of a presentation to the speech I gave about the main changes brought by CCS TSI 2023 at the biggest Czech conference on Communications and signalling systems on Railways, which was held in Clarion Hotel Olomouc from 7th to 9th November 2023 (konferenceszt.cz). Attended by around 500 participants and 200 on-line followers.
The original Czech 🇨🇿 version of the presentation can be found here: https://www.slideshare.net/slideshow/hlavni-novinky-souvisejici-s-ccs-tsi-2023-2023-1695/269688092 .
The videorecording (in Czech) from the presentation is available here: https://youtu.be/WzjJWm4IyPk?si=SImb06tuXGb30BEH .
2. 94 AS 6 (issued 1982)
Accounting Standard (AS) 6
Depreciation Accounting
(This Accounting Standard includes paragraphs set in bold italic type
and plain type, which have equal authority. Paragraphs in bold italic
type indicate the main principles. This Accounting Standard should be
read in the context of the General Instructions contained in part A of
the Annexure to the Notification.)
Introduction
1. This Standard deals with depreciation accounting and applies to all
depreciable assets, except the following items to which special considerations
apply:—
(i) forests, plantations and similar regenerative natural resources;
(ii) wasting assets including expenditure on the exploration for and
extraction of minerals, oils, natural gas and similar non-regenerative
resources;
(iii) expenditure on research and development;
(iv) goodwill and other intangible assets;
(v) live stock.
This standard also does not apply to land unless it has a limited useful life for
the enterprise.
2. Different accounting policies for depreciation are adopted by different
enterprises. Disclosure of accounting policies for depreciation followed by
an enterprise is necessary to appreciate the view presented in the financial
statements of the enterprise.
Definitions
3. The following terms are used in this Standard with the meanings
specified:
3. 58 AS 6
3.1 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 through technology and market changes.
Depreciation is allocated so as to charge a fair proportion of the
depreciable amount in each accounting period during the expected
useful life of the asset. Depreciation includes amortisation of assets
whose useful life is predetermined.
3.2 Depreciable assets are assets which
(i) are expected to be used during more than one accounting
period; and
(ii) have a limited useful life; and
(iii) are held by an enterprise for use in the production or supply of
goods and services, for rental to others, or for administrative
purposes and not for the purpose of sale in the ordinary course
of business.
3.3 Useful life is either (i) the period over which a depreciable asset is
expected to be used by the enterprise; or (ii) the number of production or
similar units expected to be obtained from the use of the asset by the
enterprise.
3.4 Depreciable amount of a depreciable asset is its historical cost, or
other amount substituted for historical cost1 in the financial statements,
less the estimated residual value.
Explanation
4. Depreciation has a significant effect in determining and presenting the
financial position and results of operations of an enterprise. Depreciation is
charged in each accounting period by reference to the extent of the depreciable
amount, irrespective of an increase in the market value of the assets.
5. Assessment of depreciation and the amount to be charged in respect
thereof in an accounting period are usually based on the following three
factors:
1
This standard does not deal with the treatment of the revaluation difference which
may arise when historical costs are substituted by revaluations.
4. Depreciation Accounting 59
(i) historical cost or other amount substituted for the historical cost of
the depreciable asset when the asset has been revalued;
(ii) expected useful life of the depreciable asset; and
(iii) estimated residual value of the depreciable asset.
6. Historical cost of a depreciable asset represents its money outlay or its
equivalent in connection with its acquisition, installation and commissioning
as well as for additions to or improvement thereof. The historical cost of a
depreciable asset may undergo subsequent changes arising as a result of
increase or decrease in long term liability on account of exchange fluctuations,
price adjustments, changes in duties or similar factors.
7. The useful life of a depreciable asset is shorter than its physical life and
is:
(i) pre-determined by legal or contractual limits, such as the expiry
dates of related leases;
(ii) directly governed by extraction or consumption;
(iii) dependent on the extent of use and physical deterioration on account
of wear and tear which again depends on operational factors, such
as, the number of shifts for which the asset is to be used, repair
and maintenance policy of the enterprise etc.; and
(iv) reduced by obsolescence arising from such factors as:
(a) technological changes;
(b) improvement in production methods;
(c) change in market demand for the product or service output
of the asset; or
(d) legal or other restrictions.
8. Determination of the useful life of a depreciable asset is a matter of
estimation and is normally based on various factors including experience
with similar types of assets. Such estimation is more difficult for an asset
using new technology or used in the production of a new product or in the
provision of a new service but is nevertheless required on some reasonable
basis.
9. Any addition or extension to an existing asset which is of a capital nature
5. 60 AS 6
and which becomes an integral part of the existing asset is depreciated over
the remaining useful life of that asset. As a practical measure, however,
depreciation is sometimes provided on such addition or extension at the rate
which is applied to an existing asset. Any addition or extension which retains
a separate identity and is capable of being used after the existing asset is
disposed of, is depreciated independently on the basis of an estimate of its
own useful life.
10. Determination of residual value of an asset is normally a difficult matter.
If such value is considered as insignificant, it is normally regarded as nil. On
the contrary, if the residual value is likely to be significant, it is estimated at
the time of acquisition/installation, or at the time of subsequent revaluation of
the asset. One of the bases for determining the residual value would be the
realisable value of similar assets which have reached the end of their useful
lives and have operated under conditions similar to those in which the asset
will be used.
11. The quantum of depreciation to be provided in an accounting period
involves the exercise of judgement by management in the light of technical,
commercial, accounting and legal requirements and accordingly may need
periodical review. If it is considered that the original estimate of useful life of
an asset requires any revision, the unamortised depreciable amount of the
asset is charged to revenue over the revised remaining useful life.
12. There are several methods of allocating depreciation over the useful
life of the assets. Those most commonly employed in industrial and
commercial enterprises are the straightline method and the reducing balance
method. The management of a business selects the most appropriate
method(s) based on various important factors e.g., (i) type of asset, (ii) the
nature of the use of such asset and (iii) circumstances prevailing in the
business. A combination of more than one method is sometimes used. In
respect of depreciable assets which do not have material value, depreciation
is often allocated fully in the accounting period in which they are acquired.
13. The statute governing an enterprise may provide the basis for computation
of the depreciation. For example, the Companies Act, 1956 lays down the
rates of depreciation in respect of various assets. Where the management’s
estimate of the useful life of an asset of the enterprise is shorter than that
envisaged under the provisions of the relevant statute, the depreciation provision
is appropriately computed by applying a higher rate. If the management’s
estimate of the useful life of the asset is longer than that envisaged under the
6. Depreciation Accounting 61
statute, depreciation rate lower than that envisaged by the statute can be
applied only in accordance with requirements of the statute.
14. Where depreciable assets are disposed of, discarded, demolished or
destroyed, the net surplus or deficiency, if material, is disclosed separately.
15. The method of depreciation is applied consistently to provide
comparability of the results of the operations of the enterprise from period to
period. A change from one method of providing depreciation to another is
made only if the adoption of the new method is required by statute or for
compliance with an accounting standard or if it is considered that the change
would result in a more appropriate preparation or presentation of the financial
statements of the enterprise. When such 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 recomputation of depreciation in accord-
ance with the new method is adjusted in the accounts in the year in which
the method of depreciation is changed. In case the change in the method
results in deficiency in depreciation in respect of past years, the deficiency is
charged in the statement of profit and loss. In case the change in the method
results in surplus, the surplus is credited to the statement of profit and loss.
Such a change is treated as a change in accounting policy and its effect is
quantified and disclosed.
16. Where the historical cost of an asset has undergone a change due to
circumstances specified in para 6 above, the depreciation on the revised
unamortised depreciable amount is provided prospectively over the
residual useful life of the asset.
Disclosure
17. The depreciation methods used, the total depreciation for the period for
each class of assets, the gross amount of each class of depreciable assets and
the related accumulated depreciation are disclosed in the financial statements
alongwith the disclosure of other accounting policies. The depreciation rates
or the useful lives of the assets are disclosed only if they are different from
the principal rates specified in the statute governing the enterprise.
18. In case the depreciable assets are revalued, the provision for
depreciation is based on the revalued amount on the estimate of the remaining
useful life of such assets. In case the revaluation has a material effect on the
7. 62 AS 6
amount of depreciation, the same is disclosed separately in the year in which
revaluation is carried out.
19. A change in the method of depreciation is treated as a change in an
accounting policy and is disclosed accordingly.2
Main Principles
20. The depreciable amount of a depreciable asset should be allocated
on a systematic basis to each accounting period during the useful life of
the asset.
21. The depreciation method selected should be applied consistently
from period to period. A change from one method of providing
depreciation to another should be made only if the adoption of the new
method is required by statute or for compliance with an accounting
standard or if it is considered that the change would result in a more
appropriate preparation or presentation of the financial statements of
the enterprise. When such a change in the method of depreciation is
made, depreciation should be recalculated in accordance with the new
method from the date of the asset coming into use. The deficiency or
surplus arising from retrospective recomputation of depreciation in
accordance with the new method should be adjusted in the accounts in
the year in which the method of depreciation is changed. In case the
change in the method results in deficiency in depreciation in respect of
past years, the deficiency should be charged in the statement of profit
and loss. In case the change in the method results in surplus, the surplus
should be credited to the statement of profit and loss. Such a change
should be treated as a change in accounting policy and its effect should
be quantified and disclosed.
22. The useful life of a depreciable asset should be estimated after
considering the following factors:
(i) expected physical wear and tear;
(ii) obsolescence;
(iii) legal or other limits on the use of the asset.
23. The useful lives of major depreciable assets or classes of
2
Refer to AS 5.
8. Depreciation Accounting 63
depreciable assets may be reviewed periodically. Where there is a revision
of the estimated useful life of an asset, the unamortised depreciable
amount should be charged over the revised remaining useful life.
24. Any addition or extension which becomes an integral part of the
existing asset should be depreciated over the remaining useful life of
that asset. The depreciation on such addition or extension may also be
provided at the rate applied to the existing asset. Where an addition or
extension retains a separate identity and is capable of being used after
the existing asset is disposed of, depreciation should be provided
independently on the basis of an estimate of its own useful life.
25. Where the historical cost of a depreciable asset has undergone a
change due to increase or decrease in long term liability on account of
exchange fluctuations, price adjustments, changes in duties or similar
factors, the depreciation on the revised unamortised depreciable amount
should be provided prospectively over the residual useful life of the
asset.
26. Where the depreciable assets are revalued, the provision for
depreciation should be based on the revalued amount and on the estimate
of the remaining useful lives of such assets. In case the revaluation has
a material effect on the amount of depreciation, the same should be
disclosed separately in the year in which revaluation is carried out.
27. If any depreciable asset is disposed of, discarded, demolished or
destroyed, the net surplus or deficiency, if material, should be disclosed
separately.
28. The following information should be disclosed in the financial
statements:
(i) the historical cost or other amount substituted for historical
cost of each class of depreciable assets;
(ii) total depreciation for the period for each class of assets; and
(iii) the related accumulated depreciation.
29. The following information should also be disclosed in the financial
statements alongwith the disclosure of other accounting policies:
9. 64 AS 6
(i) depreciation methods used; and
(ii) depreciation rates or the useful lives of the assets, if they are
different from the principal rates specified in the statute
governing the enterprise.