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 Depreciation
04-07-2010, 07:37 AM
Post: #1
 Qureshi Muhammad Zeeshan Junior Member Posts: 26 Joined: Mar 2010 Reputation: 0
Depreciation
Dear members

i have a Question Regarding Depreciation

Depreciation can be Calculated by Dividing the Cost of Asset with its life.
my Question is that whether this life is Economic life or the useful life.
well i have Studied IAS-16 and the word useful life is written over there but i m confused that suppose if there is a machine whose Economic life is 10 but it is useful for me for just 3 years.
now whether i have to calculate dep on the basis of Economic life(10) or Useful life(3 years)

infact, i have an opinion that it should be calculated on the basis on 3 year but a friend of mine Argued that is must be calculated on the basis of its Economic life.
04-09-2010, 06:36 AM
Post: #2
 ETK Junior Member Posts: 16 Joined: Aug 2009 Reputation: 0

economic life may b scrap value n depreciation is always divided by useful life.
original cost-scrap value/useful life
04-09-2010, 05:35 PM
Post: #3
 Javed Jattak Junior Member Posts: 4 Joined: Apr 2010 Reputation: 0

Depreciation is always calculted by economic life of an asset, Ist we must see the financial policy of the organization regardind it is streight line of diminshing balance methord,
04-10-2010, 06:20 PM
Post: #4
 ETK Junior Member Posts: 16 Joined: Aug 2009 Reputation: 0

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Qureshi Muhammad Zeeshan</i>
<br />Dear members

i have a Question Regarding Depreciation

Depreciation can be Calculated by Dividing the Cost of Asset with its life.
my Question is that whether this life is Economic life or the useful life.
well i have Studied IAS-16 and the word useful life is written over there but i m confused that suppose if there is a machine whose Economic life is 10 but it is useful for me for just 3 years.
now whether i have to calculate dep on the basis of Economic life(10) or Useful life(3 years)

infact, i have an opinion that it should be calculated on the basis on 3 year but a friend of mine Argued that is must be calculated on the basis of its Economic life.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

but if useful life is given it means its straight line method...isnt it..n in diminishing balance method...we have rate of depreciation n book value of asset..not original cost
04-10-2010, 09:10 PM
Post: #5
 Qureshi Muhammad Zeeshan Junior Member Posts: 26 Joined: Mar 2010 Reputation: 0

dear friends i appreciate your replies but sorry to say that u people did not understand that what is my problem.it is because of lack of my communication skills.
i just want to know whether a person in straight line method divides the depreciable amount with Asset's Useful life or Asset's Economic life

it is mentioned in IAS-16 that it must be divided by its useful life

but i m confused that if Useful life is shorter then Asset's Economic life then whether i should depreciate it in accordance with its useful life or Economic life.
04-15-2010, 12:47 AM
Post: #6
 tayaaam Junior Member Posts: 10 Joined: Nov 2009 Reputation: 0

depreciation be calculated as to useful life not economic life that is according international financial reporting standards - ifrs standard
useful life means that future benefits divers from consume asset
example coputer asset its economic life is 10 years but future econonic benefit divers from that compuer life continue 3 years as to me as accountant to compane and i am resbonsible about correct treatement according ifrs i will treat that issue as follow
i will follow future benefit to asset and useful life to asset in this case i will treatment by useful life that is 3 years
good luke
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