Hai friends,
Acc to as - 6 the surplus arising from the change in method of depreciation should be credited to p&l account.
If the surplus was shown as net off with the current year depreciation i..e, there are new block of assets were purchased during the year. Does the practise was correct.
As per Accounting Standard 6 'Depreciation', the surplus / defecit arising in depreciation on account of change in method of depreciation should be credited / debited to Profit and Loss a/c. It cannot be adjusted against the Depreciation of the current year.
Hence, the above mentioned practice is in contravention to the provisions of Accounting Standard 6.
Regards,
Devendra Kulkarni
M N Rao & Associates LLP
Vijayawada
CA Inter
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Fytomax Nutrition Private Limited
Aurangabad
CA Inter
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