WHAT ARE THE PROCEDURES AND ACCOUNTING ADJUSTMENTS TO BE DONE IN CASE OF A COMPANY WHICH IS APPLYING DEPRECIATION AS PER COMPANIES ACT IN PREPARATION OF ANNUAL ACCOUNTS SINCE 14 YEARS AND NOW WANTS TO CHANGE THE METHOD OF DEPRECIATION TO AS PER I.T.ACT SINCE 01.04.2009 WHILE PREPARING ANNUAL ACCOUNTS.
11 October 2009
As per companies act you have to compulsorily follow the methods given in that act. You cannot swithover to other acts. However the rates can vary and you have to give suitatble notes.
11 October 2009
@ Adaptation of different method of depreciation is either required by statue or to comply with accounting standard @ It i considered that change would result in more appropriate presentation of financial statement .
what is the requirements?
If you are going to change any accounting policie.The discolsure for the same should be given in your financial statement along with the affect of such change ( i.e the amount by whic your asset will appreciate in value by changing the method of of depriciation)
The method of depreciation is changed to as per I.T.Act so that it is not required to calculate depreciation as per two different methods (Companies Act AND I.T.Act)every year.
14 October 2009
Yes you can change the method. Only care you has to take that the new rates you are applying must not be lesser than schedule XIV of companies act. In notes to account you will have to show the impact due to change in depreciation method. This impact will be shown in notes to accounts (in quarterly results & in annual report) in March 2010.
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