Advanced Accounting Concepts (Part II)
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Advanced Accounting Concepts (Part II)
- 1. Depreciation Accounting Accounting for Fixed Assets Advanced Financial Concepts (Part II)
- 3. Depreciation Process Depreciation Allocation of depreciable Amount On Depreciable Asset To Each Accounting Period During the Useful life of the Asset
- 8. Depreciation Accounting: …..cont - 7 - Change in Depreciable amount Change in METHOD Other Causes Historical Cost Expected residual Value Estimated useful value Retrospective effect Prospective effect
- 10. Depreciation Accounting: …..cont - 9 - Depreciation Rates: Accounting Standard – 6 does not specify any rate of depreciation. But it enables by implication , an entity to adopt the rates stipulated in Schedule XIV of the Companies Act. The rates provided in Schedule XIV of the Companied Act are bare minimum that requires to be provided. For the purpose of calculation of tax, depreciation has to be calculated according to the rates specified under the Income Tax Act.
- 11. Depreciation Accounting: …..cont Straight line method Vs Written Down Value method - 10 - Method Formula Effect on FS Straight line (SLM) Cost (-) ERV Useful life Charge equally spread over useful life. Reducing balance (WDV) Net carrying amount of fixed assets X % charge Front end loading of cost on revenue (later years reduced)
- 13. Thank You 20 October 2009