Ifrs and indian as.. please help

I have a query relating to dep which i am unable to solve so thought you could help me on that.

query goes like this-

We have concept of writing off assets valuing less than 5000rs.

Suppose we have a building that costs Rs 6000 and we provide WDV on that. Now we have constructed one more room in that building which costed us rs 4000. So, we add this 40000 to 60000 and treat building as rs.10000.

IFRS has the concept of componentization ie each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately.

Now my ques is, if any indian company is applying IFRS how will they deal with this? Will they write off room cost of Rs4000 treating room and building separately as per IFRS or they will treat building and room as one as charge normal dep on Rs10000.

Also, is concept of writing off assets less than rs5000 there in IFRS?

Thanks in advance,

Pavitra

Dear Pavitra,

First of all , there is no concept of writing off of assets less than Rs. 5000 fully in the year of purchase as per IFRS. Its upto accounting policy of the company. Even schedule II of the Companies Act, 2013 does not make it mandatory to write off all assets costing less than Rs. 5000 @ 100% p.a.

As regarding component accounting, it say that if any component of the asset has useful life which is significantly different as compared to useful life of the full asset, then, that component and remaing asset must be depreciated over respective useful lives. However, it must be remembered that component must be material part of the assets and its life must be different from the useful life of remaiing asset.

In your exapmple, it cannot be concluded that useful life of room is significantly different from useful life of building. Room are integral part of the building. Hence, both rooms and remaining building must be depreciated over useful life of assets.

regards

Amit Goel

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pavitra gupta

amit

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