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Hi all, i like to ask a f7 question, if i buy a non current asset, say, before 2013 dec accounting year. but asset only arrives after acct yr after jan 14. can i take into account of the asset at yr2013 but not depreciate, and only depreciate on yr 2014?
when should i account it?
That’s an awkward one! If you have not yet received the asset, then don’t account for it in any way … so nothing into TNCA and certainly no depreciation. If you have paid for the asset in advance, I would show that as a current receivable. There should be a note in the financial statements about the capital commitments of the ordered asset.
Even if you HAVE received the asset, but it is not yet in production (maybe waiting to be correctly installed and commissioned) then again, no depreciation. The purpose of depreciating an asset is to spread the cost of the asset over the accounting periods which will benefit from the use of that asset, and if it’s not yet in production, then the current accounting period is certainly not going to benefit from its use. So no depreciation.
Hope that helps
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