Depreciation calculation

Dear sir,

I would like to know how to enter the depreciation jounal entries when the items useful life changed. Example I have 1000 rupees furniture. i am depreciating at the rate of 20% (that means 5 Years). I already depreciated 3 years.  Now i would like to change the life of the items from 5 years to 10 years, that means 10%. How can i make entries for the 4th year depreciation according to the new rate.

I am very much thankful if anyone help me to come out from this.

Regards

P.H Nair

 

 

Replies (4)

depriciation shall make 2yrs extra to cover the period of 5 yrs @ 20%p.a..then charge  6 to 10 yrs depriciation i.e. 5 yrs depriciation @ 10% p.a.

Dear Sir,

 

Still i couldnt get your logic. If you dont mind can you explain little bit more.

 

Thanks

 

 

Pls. explain  the method of depreciation you have adopted i.e. SLM or WDV.

 

Dear Sir,

The method we are adopting is SLM. I will explain you what i did. I want to know whether it is correct not not as per IAS-8 for reporting and asjustment or IFRS.

DOP-01-01-2009  value of assets Rs.1000/- Dep rate 25% 3 year already competed (Rs.750). Net book value is Rs.250 as on 01-12-2011.

Now we changed the rate of depreciation from 25 to 20% from 01-01-2012.

My question whether i want to ajust the pervious years depareciation (writing back for the 3 years which i calculated at the rate of 25%) or shall i entered the new depreciation rate directly from the date of change without any adjustment.

Please advise.

 

thanks

 

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