pravanjan mishra (Accountant) (53 Points)
24 November 2009Hi,Any body help me plz.
I have a confusion incase of Depreciation calc. when we will move suddenly from W D V metod to Straightline method weather we have to calculate the % of dep from first year amount or from the balance amount at the end of year from which we have to change the method.
CA Abhash Mishra
(Chartered Accountants)
(598 Points)
Replied 24 November 2009
FIRST OF ALL YOU SHOULD CALCULATE DEPRECIATION AS PER WDV & SL SEPERATELY FROM THE STARTING YEAR. THERE AFTER CALCULATE DIFFERENCE IF DEPRECIATION IS MORE IN STRAIGHT LINE THEN DEPRECIATION SHOULD BE DEBITED TO PL IF IT IS LESS IT SHOULD BE CREDITED TO PL.
ABHASH
CA. Rishabh Mittal
(CA in Practice)
(1077 Points)
Replied 26 November 2009
As per AS-6 issued by ICAI, Change in method of depreciation has to be given retrospective effect. Therefore, calculate depreciation from both the methods from the beggining of the year of purchase & treat difference in dep amount accordingly. I.e. If Dep as per SLM > Dep as per WDV, write off excess dep in same F.Y. along with current year depreciation as per SLM.
Please note that change in method of dep is permitted only if required by any other AS or legal requirement or for better presentation of financial statements.
Hareesh H Sharma
(Cleared IPCC..now article)
(894 Points)
Replied 28 November 2009
| Originally posted by :CA. Rishabh Mittal | ||
| " | As per AS-6 issued by ICAI, Change in method of depreciation has to be given retrospective effect. Therefore, calculate depreciation from both the methods from the beggining of the year of purchase & treat difference in dep amount accordingly. I.e. If Dep as per SLM > Dep as per WDV, write off excess dep in same F.Y. along with current year depreciation as per SLM. Please note that change in method of dep is permitted only if required by any other AS or legal requirement or for better presentation of financial statements. |
" |
And it should also be disclosed in books of accounts as per AS 5...right sir??
triumph-CMA
(Chartered Accountant)
(503 Points)
Replied 28 November 2009
Right.
It must be disclosed as it is a chnage in accounting policy.
CA Rahul Jain
(CA)
(1162 Points)
Replied 30 November 2009
further, in notes to accounts, auditor shall quantify the effect of the change in method of dep
Pranjal
(Article)
(52 Points)
Replied 04 December 2009
in the case of change in depriciation method we may take effect from frist year with retrospected effect and the deff. is set off in the p/l a/c in the year in which method change
pravanjan mishra
(Accountant)
(53 Points)
Replied 04 December 2009
| Originally posted by :Pranjal | ||
| " | in the case of change in depriciation method we may take effect from frist year with retrospected effect and the deff. is set off in the p/l a/c in the year in which method change | " |
Right Pranjal.
kailash
(CA)
(49 Points)
Replied 04 December 2009
The effect of changes in accounting policy should be shown in the financial statement.
CAclubindia
