Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

Is it possible that depreciation on future year calculated more if possible by which method?

user-image
Question added by Tariq Raza , Manager Finance , THK SOLUTIONS PRIVATE LIMITED
Date Posted: 2013/12/10
Aziz ur Rehman ur Rehman
by Aziz ur Rehman ur Rehman , Assistant Manager Finance , Central Power Puchasing Agency (CPPA)

No

There is no method for accounting that porduce the results in such a way that the deperciation is less in earlier years and more in later years of the life of asset

unless 

the asset is revalued  but again this is not the method of deperciation. 

mukkur srinivasan varadhan
by mukkur srinivasan varadhan , Chartered Accountant , Chartered Accountant in practice

Only the following two  methods of valuation of depreciation are recognised:

(1)Written down value method.

(2)Straightline method.

In both both these methods , depreciation will not be more in latter years.

 

Kaleem-ur-Rehman Rana
by Kaleem-ur-Rehman Rana , Finance Executive , Open D Group (ODG)

Yes, It is possible, depriciation can be more in future years if the assets is being revalued.

There are two methods of measurement of assets as per IAS-16 Property, Plant and Equipment.

  • Cost Model.
  • Revaluation Model.

IAS-16 says, if the asset has been ravalued then it should be recognised in the statement of financial position on the revalued amount by crediting the revaluation surplus in statement of changes in equity.

once the asset has been revalued then it sould be depriciated on the revalued amount over the remaining useful life of the asset, prospectively as change in accounting estimate under IAS-8.

So in that case the depriciation of the asset will be less in prior years and more in the future years. IAS-16 also states that once a class of assets is revalued, it should be reviewed at the end of each reporting period to determine any change in the revaluation.

More Questions Like This

Do you need help in adding the right keywords to your CV? Let our CV writing experts help you.