Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Depreciation
- This topic has 6 replies, 3 voices, and was last updated 8 years ago by Ken Garrett.
- AuthorPosts
- October 7, 2015 at 7:03 am #275289
What sufficient evidence can be obtained about Depreciation as its an estimate
October 7, 2015 at 7:40 am #275294Is it in line with last year’s?
Is it in line with industry averages or what’s expected for that class of non-current assets?
If it’s a new machine obtain estimates from managers (and perhaps the machine manufacturers) of its likely life.
Recalculate the depreciation.
Ask for management representations about the adequacy of the depreciation charge.
October 7, 2015 at 8:09 am #275305Absolutely . I also would like to add the following of which if they are not correct please correct me sir.
-review depreciation rates in relation to asset lives,obsolescence and depreciation policy
-inspect the asset register to ensure that all assets with limited life are depreciated
-scrutinize all revaluations made and ascertain that depreciation has been adjusted according
-physical inspection of assets just in case assets which are beyond use are still being depreciated
-reperform calculation of depreciation to ascertain it’s correctness
-Compare depreciation rates for current year to prior years for consistency
-Examine draft accounts to confirm whether disclosures about depreciation policies are correct .I believe these procedures would help also to obtain sufficient ,appropriate evidence required in the circumstances of audit of non current assets .
October 7, 2015 at 8:14 am #275310And also asset certificates include information such as expected life?If so is it enough to confirm asset life?
October 7, 2015 at 10:59 am #275344What’s an asset certificate?
October 7, 2015 at 5:45 pm #275445I meant asset register. Sorry about that.
October 7, 2015 at 7:40 pm #275460Yes indeed, though you need to do some sort of appraisal of the reasonableness of the rates used there
- AuthorPosts
- You must be logged in to reply to this topic.