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AS – 6




Disclosing of depreciation is an accounting policy followed by an enterprise. So, it should be disclosed.


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


(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.




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.


Methods for calculating depreciation:

1.     Straight line method.

2.     Written down value method.

3.     Annuity method.

4.     Sinking fund method.


Disclosure requirements:

 The following should be disclosed:

         The historical cost each class of assets;


         Total depreciation for the period.


         The related accumulated depreciation;


         Depreciation methods used; and



         Depreciation rates (only if they are different from the principal rates specified in the statute governing the enterprise.)





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