08-17-2009, 07:26 PM
IAS-16 requires charging depreciation from the date when asset is put into use till the date asset remains under use. (Reference Paragraph 50 and 55 of IAS-16).
Idle capacity tenure should be kept in view while arriving at the useful life and applicable depreciation rates. However, non-charging of depreciation for idle period (for example in seasonal industries like ice factories) is not allowed.
Once useful life has been deteremined and depreciation rates are finalized, charging of depreciation remains a MUST. If idle period was not taken into account while finalizing the depreciation rate, the same can be revised (as a change in Estimate) and lowered, if warranted.
Assets (only Land and Building) can be held as Investment Properties, if not utilized for operations; and are held for earning rentals or value appreciation. (Reference IAS-40). Investment properties can be accounted for either under fair value model or cost model. In case of cost model, depreciation is charged. In case of fair value model, these are stated on fair values, gains or losses being taken to Profit or Loss.
In all other cases depreciation has to be charged.
Regards,
KAMRAN.
Idle capacity tenure should be kept in view while arriving at the useful life and applicable depreciation rates. However, non-charging of depreciation for idle period (for example in seasonal industries like ice factories) is not allowed.
Once useful life has been deteremined and depreciation rates are finalized, charging of depreciation remains a MUST. If idle period was not taken into account while finalizing the depreciation rate, the same can be revised (as a change in Estimate) and lowered, if warranted.
Assets (only Land and Building) can be held as Investment Properties, if not utilized for operations; and are held for earning rentals or value appreciation. (Reference IAS-40). Investment properties can be accounted for either under fair value model or cost model. In case of cost model, depreciation is charged. In case of fair value model, these are stated on fair values, gains or losses being taken to Profit or Loss.
In all other cases depreciation has to be charged.
Regards,
KAMRAN.
