11-23-2010, 03:14 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Nobin</i>
<br />Hi
Your question to depreciation for idle asset is referred.
As per IAS 16. Depreciation of an asset begins when the assets is available for use in the manner as intended by management. The depreciation charge ceases when the asset is derecognised. Hence, depreciation does not cease when the asset become idle or is retired from active use unless the asset is fully depreciated. However, only under the usage method (the depn method elected)the depreciation can be nil where there is no production. In your case, the Ac has to be depreciated even when not in use once it has been recognised as an asset.
The depreciation method used should reflect the pattern in which the asset's economic benefits are consumed by the entity .
Further, the depreciation method should be reviewed at least annually and, if the pattern of consumption of benefits has changed, the depreciation method should be changed prospectively as a change in estimate under IAS 8.
Well I hope this answer your question.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Therefore, assuming the economic benefit from the idle asset being minimal it could be depreciated at an estimated lower rate, than what would have applied to it under normal operating conditions?
Anyways, your answer is quite good and it does explain the issue quite well. Thank you for your thoughts.
<br />Hi
Your question to depreciation for idle asset is referred.
As per IAS 16. Depreciation of an asset begins when the assets is available for use in the manner as intended by management. The depreciation charge ceases when the asset is derecognised. Hence, depreciation does not cease when the asset become idle or is retired from active use unless the asset is fully depreciated. However, only under the usage method (the depn method elected)the depreciation can be nil where there is no production. In your case, the Ac has to be depreciated even when not in use once it has been recognised as an asset.
The depreciation method used should reflect the pattern in which the asset's economic benefits are consumed by the entity .
Further, the depreciation method should be reviewed at least annually and, if the pattern of consumption of benefits has changed, the depreciation method should be changed prospectively as a change in estimate under IAS 8.
Well I hope this answer your question.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Therefore, assuming the economic benefit from the idle asset being minimal it could be depreciated at an estimated lower rate, than what would have applied to it under normal operating conditions?
Anyways, your answer is quite good and it does explain the issue quite well. Thank you for your thoughts.
