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| Reader Comments on :: Depreciation on PPE | |
| 1. Useful life of an asset is the period over which a depreciable asset is expected to be used by the entity, or the number of production or similar units expected to be obtained from the asset by the entity. You are right that different company will use different estimated useful life for the same asset depending upon the nature of their business. This is because the way asset is being used by company may vary. Suppose, Entity A has adequate office vehicles but the vehicles are used only for staff movement from home to office and back. The useful life of the same vehicle will be less, if another Entity B having few vehicles uses the same type of vehicle for staff on tour from one Dzongkhag to another. The useful life of an asset is entity specific and its useful will differ from entity to entity. In general, BAS is a principles-based approach and allows more scope for exercising judgment in the application of principles to specific situations. 2. If the depreciation rate specified in Income Tax Act is appropriate to depreciate an asset with a limited useful life so that the financial statements reflect the consumption of the asset’s service potential that occurs while the asset is held, it won’t be contravening with the principle of BAS. 3. The BAS will not supersede Companies Act or Income Tax Act. BAS is an accounting standards which sets out recognition, measurement, presentation and disclosure requirements dealing with transactions and events that are important in general purpose financial statements(GPFS) which are directed towards the common information needs of a wide range of users. An entity which are specified and required by the regulators to prepare their GPFS as per BAS must comply with BAS. Hope this helps. Posted By: Tshechu Posted on: 2018-05-15 11:57:13 | |
| Depreciation on PPE 1) How do we ascertain the useful life of Assets. Different company had followed different useful life although the nature of asset is same (for example vehicle, some company have estimated 5 years while some have 10 years). Where is the consistency. 2) We understand that the rates prescribed by Income Tax of Bhutan 2001 and also by Company Act of Kingdom of 2000 is based on the useful life of the assets. Is following the rates specified in Income Tax Act contravenes the BAS without mentioning that income tax rate has been followed in the notes to accounts. Our estimated useful life is arrived at from the rates specified in Income Tax Act. 3) Will BAS supersede Company Act & Income Tax Act although the BAS is not an Act? Posted By: kaydee Posted on: 2018-05-15 11:57:13 |
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