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    Accounting Standard - 6

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    Yudhister Reddy
    This document outlines accounting standard 6 on depreciation accounting. It defines depreciation as the wearing out or loss of value of an asset due to use or age. It defines depreciable assets as those used for over a year in production, supply, renting or administration. The depreciable amount is the historical cost minus the estimated residual value. An enterprise must allocate the depreciable amount systematically over the asset's useful life. Methods for depreciation include the straight line method and written down value method. Financial statements must disclose cost of assets, depreciation, accumulated depreciation, depreciation methods and rates.

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    Accounting Standard - 6

    Uploaded by

    Yudhister Reddy
    49 views8 pages
    This document outlines accounting standard 6 on depreciation accounting. It defines depreciation as the wearing out or loss of value of an asset due to use or age. It defines depreciable assets as those used for over a year in production, supply, renting or administration. The depreciable amount is the historical cost minus the estimated residual value. An enterprise must allocate the depreciable amount systematically over the asset's useful life. Methods for depreciation include the straight line method and written down value method. Financial statements must disclose cost of assets, depreciation, accumulated depreciation, depreciation methods and rates.

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    This document outlines accounting standard 6 on depreciation accounting. It defines depreciation as the wearing out or loss of value of an asset due to use or age. It defines depreciable assets as those used for over a year in production, supply, renting or administration. The depreciable amount is the historical cost minus the estimated residual value. An enterprise must allocate the depreciable amount systematically over the asset's useful life. Methods for depreciation include the straight line method and written down value method. Financial statements must disclose cost of assets, depreciation, accumulated depreciation, depreciation methods and rates.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    49 views8 pages

    Accounting Standard - 6

    Uploaded by

    Yudhister Reddy
    This document outlines accounting standard 6 on depreciation accounting. It defines depreciation as the wearing out or loss of value of an asset due to use or age. It defines depreciable assets as those used for over a year in production, supply, renting or administration. The depreciable amount is the historical cost minus the estimated residual value. An enterprise must allocate the depreciable amount systematically over the asset's useful life. Methods for depreciation include the straight line method and written down value method. Financial statements must disclose cost of assets, depreciation, accumulated depreciation, depreciation methods and rates.

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    ACCOUNTING STANDARD - 6

    DEPRECIATION ACCOUNTING

    J.P., KAPUR & UBERAI

    OBJECTIVE

    DISCLOSURE OF ACCOUNTING POLICY FOR DEPRECIATION FOLLOWED BY AN ENTERPRISE

    J.P., KAPUR & UBERAI

    DEFINITIONS

    DEPRECIATION
    Is a measure of the wearing out, consumption or other loss of value of a depreciable asset arising from use, effluxion of time or obsolescence due to technology and market changes.

    J.P., KAPUR & UBERAI

    DEFINITIONS
    DEPRECIABLE ASSETS are assets which: Used during more than one year Have a limited useful life

    Are held by an enterprise for use in :


    the production or supply of goods and services

    for renting to others


    for administrative purposes not for the purpose of sale in the ordinary course of business. J.P., KAPUR & UBERAI

    DEFINITIONS
    DEPRECIABLE AMOUNT OF AN ASSET Is its historical cost, or other amount substituted for historical cost in the financial statements, less the estimated residual value. Depreciable amount of a depreciable asset should be allocated on a systematic basis to each accounting period during its useful life.
    J.P., KAPUR & UBERAI

    ASSESSMENT OF DEPRECIATION
    1. 2. Historical cost Expected useful life of the depreciable asset Estimated residual value of the depreciable asset.

    3.

    J.P., KAPUR & UBERAI

    METHODS FOLLOWED
    1.

    STRAIGHTLINE METHOD

    2. WRITTEN DOWN VALUE METHOD


    If a change in the method of depreciation is made, depreciation is recalculated in accordance with the new method from the date of the asset coming into use. The deficiency or surplus arising from retrospective re-computation is adjusted in the profit and loss account in the year in which the method of depreciation is changed.

    J.P., KAPUR & UBERAI

    DISCLOSURE REQUIREMENTS
    The historical cost each class of assets; Total depreciation for the period.

    The related accumulated depreciation;


    Depreciation methods used; and

    Depreciation rates (only if they are different from the principal rates specified in the statute governing the enterprise.)
    J.P., KAPUR & UBERAI

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