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Restrospective change in life of intangible asset

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Sangita Jani

associate vice president

93 Points Posted on 08 November 2022

hi

our company had acquired the core lending system in 2020. and as per company policy we started to amortize for the period of 5 years. but now we realise that this intngible asset will have a total life of 7 years

if now we change the policy and compute the revised depreciation, do we chArge it back to P/L and continue with the revised rate???

please advise

thanks
sangita
9004665758

Replies (3)

Quick Summary

A company acquired a core lending system in 2020 and amortised it over 5 years. They now realise the asset's useful life is 7 years and are seeking advice on changing the policy. The discussion explores whether this change should be retrospective, impacting the Profit & Loss account, or treated as a change in estimate from the current year. It also touches upon potential conflicts with the Companies Act regarding the 5-year amortisation limit.

Yasaswi Gomes new

Finance

3328 Points Posted on 08 November 2022

Think as per as5 the material effect must be shown from current year when there is a change in accounting policy. However, you can great it as change in estimate and treat it from current year because you did not change depreciation policy. Its not retrospective i guess.

Ahmed Malik

68 Points Posted on 10 November 2022

Largest network for finance professionals https://gas-stationsnearme.com/ Alternatively, you can log in using from current year when there is a change in accounting policy However, you can great it as change.