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Depreciation charge when production is stopped

Raja (CA Job) (30 Points)

09 September 2012

I would like to know whether depreciation can be skipped during the period when there is no production due to situation beyond management control.

Further can depreciation be capitalised on assets which were originally capitalised and used for production activities but since production is stopped used in R&D of new products.

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1 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 09 September 2012

As per AS-6 Depreciation acoc*nting depreciation means decrease in the value of assets due to its use, effluxion, passage of time. So even if production is stopped, tehre is passage of time so depreciation needs to be charged. Once the assets are being installed in the factory then dpereciation shud be charged irrespective of there is any production or not.