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hi, its quite confusing to differentiate between accounting policy and estimates, specially about the measurement criteria included in accounting policy definition like for example Change in method of depreciation is also a measurement aspect , then why is it estimate and not policy, is it because it’s not directly measuring the asset like fifo lifo measure inventories directly? M really confused
The PPE is measured at cost less accumulated depreciation, so the policy is to depreciate the asset. The only potential change in measurement here is from historic cost to the revaluation model. We will always have to depreciate unless it is land.
The estimate is the depreciation method as we are estimating how the cost is spread over the life of the asset. Any change to the method is a change in estimate and dealt with prospectively.
Thanks
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