A Private Limited Company provided depreciation in its books for the financial year 2010-11 as per rates provided in The Income Tax Act.. Can we change the rate of depreciation as per the Companies Act now for providing depreciation on WDV as on 01.04.2011? Should we make any disclosure in the Audit Report?
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Change in rate of depreciation on fixed assets
Replies (2)
As Per AS-6 Depreciation Accounting, A change from one method of providing depreciation to anotheris made only if the adoption of the new method is required by statute or forcompliance with an accounting standard or if it is considered that the changewould result in a more appropriate preparation or presentation of the financial statements of the enterprise.
So if change satisfies any of teh criteria mentioned above then only it can be changed.
Yes. If the change in method of depreciation is done as per AS-6 ,it will amount to change is accounting polciy and it requires disclosure in the financial statements.
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