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- July 21, 2015 at 4:09 pm #261296
” IAS 16 states depreciation of an asset begins when it is available for use”, Sir I though depreciation of an asset begins when it brought into use. Sir if a company creates a NCA for it own use, when did the depreciation start? when it finish with the production of the asset or when it actually put it into service?
July 21, 2015 at 5:28 pm #261314Ask yourself “Why would they produce it and then not start to use it?”
Following the matching concept, depreciation should start when the asset begins to contribute to revenues / profits
July 21, 2015 at 5:52 pm #261321yes Sir, but sometime the company can decide to start to use it at the beginning of the following year for example. In that case, the depreciation shouldn’t be when the NCA start working?
your answer
“Following the matching concept, depreciation should start when the asset begins to contribute to revenues / profits” with
” IAS 16 states depreciation of an asset begins when it is available for use” seem to diverge. the date that the NCA is available to use and the date that it starts to contribute to rev/profit can be different.
i am confused Sir.July 21, 2015 at 6:00 pm #261329I agree that it’s confusing. Personally, should I face the problem in real life, I would be inclined to depreciate only as from the date it started to contribute.
That just shows you how easy it is to adopt an approach that is in conflict with Standards
Sorry
🙁
July 21, 2015 at 6:09 pm #261336not problem at all. thanks a lot Sir
July 21, 2015 at 6:26 pm #261338You’re welcome
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