- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
a mine is being constructed.
the year end on 30 sep.
and the mine is completed on 31 aug.the question does not specify the company policy on depreciation. so i assume that most companies charge full year of dep in the year of acquisition and none at disposal.
however the answer charges only ONE MONTH’S dep, i.e., for the month of sept.
the definition is of course that u start depreciation when the asset is AVAILABLE FOR USE.
so… if a question does not explicitly give a policy on depreciation, we apply the definition? is that correct?
or is there something i am missing for assets that are self constructed, like a mine.
You’re absolutely correct with the “available for use” comment and I’m a bit surprised that you thought that “most companies charge full year of dep in the year of acquisition and none at disposal.” Where have you got that from?
If a question doesn’t mention (and in F7 it is highly probable that the examiner will make it crystal clear) then depreciate for the appropriate number of months since acquisition or since availability for use.
That rule doesn’t apply, of course, where depreciation is on a machine-hour basis!
thanks … problem solved!!!
but the cooment: “most companies charge full year of dep in the year of acquisition and none at disposal.” was used extensively in F3 …. so i figured that this might be the case…but now this is irrelevant
- You must be logged in to reply to this topic.