Depreciation policies

AS 1025 views 4 replies

SUBRAMANI N.

ARTICLESHIP TRAINING

36 Points Joined January 2009

can branches follow seperate depreciation policies

Replies (4)

Sumit Bhimrajka

ASST. MANAGER (A/CS & FIN.)

26 Points Joined June 2012

No. Branches cannot follow separate depreciation policy because choosing of method to be employed for depreciation is a policy decesion but the rate and the other aspects regarding computation and charging of depreciation are set out by the concerned authorities which has to be uniformly applied to all the units of the entity.

Milind M. Kulkarni

Practicing CA

589 Points Joined April 2011

Method and rates of depreciation to be followed for branch fixed assets is to be decided by HO of the company. These can be different from the method and rates followed for HO assets if HO Accounts so decides (the decision making power is with HO and not with branches). This can be done if HO Accounts can justify a different method and different rates and these are in compliance with AS - 6 and Schedule XIV of the Companies Act.

selim

Manager (Finance)

62 Points Joined June 2011

i guess, a entity (may have multiplr btanches under same entity) should have same depreciation policies.

Guest

As per para 12 of AS 6 combination of different methods (different accounting policies) can be adopted by the enterprise as per para 12 of AS 6 . which is reproduced below

12. There are several methods of allocating depreciation over the useful

life of the assets. Those most commonly employed in industrial and

commercial enterprises are the straightline method and the reducing balance

Depreciation Accounting

method. The management of a business selects the most appropriate

method(s) ( which indicates that more than one method can be adopted ) based on various important factors e.g., (i) type of asset, (ii) the

nature of the use of such asset and (iii) circumstances prevailing in the

business. A combination of more than one method is sometimes used. In

respect of depreciable assets which do not have material value, depreciation

is often allocated fully in the accounting period in which they are acquired.

Finally the depreciation policy which you have adopted for branch assets should be in consistent manner.