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Depreciation policy

Pankaj (SAP FICO Consultant) (82 Points)

19 February 2013

Hi All Experts,

I am working for one Automobile Industry UK.

I have question about depreciation policy : Whether vehicle created in plant and placed at Warehouse for some time. Will it be liable for depreciation ?

Eg :

Vehicle created on : 1st Jan 2013
Vehicle stored in warehouse from 1st Jan 2013 to 30th June 2013 ( around 6 months. )

So as per accounting principles will depreciation applicable for these kind of stored vehicles ?

Kindly provide experts view.

Regards,

Pankaj Bhalerao.
SAP FICO Consultant.

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1 Replies

Rashid Mehmood (Group Chief Financial Officer at Al Kaki Hospitality Group Saudi Arabia ) (1494 Points)
Replied 22 February 2013

Dear Pankaj

Your question is not clear about the purpose to use these vehicles. if these vehicles are stored to sales and your company is engaged in manufacturing or selling of such vehilces then no depreciation will be charged as these vehicles will be treated as inventory.

on the other hand, if these vehicles are stored in warehouse to use them in operations, then depreciation will be charged either these vehicles are used or remained unused and placed in warehouse.

hoping it will suffice your concerns.