Hello Everyone,
We are doing an accounting of an event Management company. In 2007-08, the company incured the expenditure on office renovation which was capitalised.but now in 2012-13 the company feels that it should not be capitalised and accordingly it took it in the revenue account (the written down value).My question is since it is treated as the expense will the depreciation entry for previous years have to be reversed for last years???
The particular transaction involves changes in AS 1 - Disclosure of accounting policy, AS 6-Depreciation Accounting and AS 10 - Fixed Assets.
As the expenses capitlsed in the FY 2007-08 based on which the financial statements were certified by since then upto FY 2011-12 by following accounting polices consistently.
Coming to your question about reversal of depreciation, when U treated as expenses as revenue then U need to reverse the depreciation for previous years also as there in no fixed asset for particular amount.
At the same time u have to adhere AS 1, 6 and 10.
CCI
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CAclubindia
