Change in accounting policy
This query is : Resolved
05 February 2013
If company claiming depreciation on single shift basis on plant & machinery from the inception of the company. However, P & M is designed to work for continuous process. P & M is depreciated for single shift for 5 years as it is working under production capacity ( around 40% to 50%)
Now, company after 5 years, wants to change depreciation rates for P & M from single shift to continuous process as achieved nearly 80% production capacity.
whether any retrospective depreciation impact is required to be given in p & l A/c or merely disclosure with quantification in notes to account is sufficient?? Further, it would be treated as change in accounting policy or change in estimation??
Now, company after 5 years, wants to change depreciation rates for P & M from single shift to continuous process as achieved nearly 80% production capacity.
whether any retrospective depreciation impact is required to be given in p & l A/c or merely disclosure with quantification in notes to account is sufficient?? Further, it would be treated as change in accounting policy or change in estimation??
06 February 2013
Depreciation is a charge on useful life of the asset. Any change in the depreciation method is a change in estimate only and has to be done on a prospective basis.
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