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AS – 6
DEPRECIATION ACCOUNTING
Objective: Disclosing
of depreciation is an accounting policy followed by an
enterprise. So, it should be disclosed.
Scope: This
standard applies to depreciable assets such as: (i) forests,
plantations and similar regenerative natural resources; (ii) wasting
assets including expenditure on the exploration for and extraction
of minerals, oils, natural gas and similar non-regenerative resources; (iii)
expenditure on research and development; (iv)
goodwill; (v) live
stock It does not
apply to land unless it has a limited useful for the company.
Definitions:
Depreciation: It is a
measure of the wearing out, consumption or other loss of value
of a depreciable asset arising from use, obsolescence due to
technology and market changes.
Depreciable assets:
Assets
which used during more than one year but having a limited useful
life and are held by an enterprise for use in:
·
the production or supply of goods and services
·
for renting to others
·
for administrative purposes
·
not for the purpose of sale in the ordinary course of business.
Depreciable amount: It is its
historical cost, or other amount substituted for historical cost
less the estimated residual value.
•
Depreciation rates (only if they are different from the
principal rates specified in the statute governing the
enterprise.) |
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