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TMI BlogDepreciation and amortizationX X X X Extracts X X X X X X X X Extracts X X X X ..... atements. 2. Objective The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Depreciation and Amortisation with reasonable accuracy. 3. Scope This standard shall be applied to cost statements which require measurement, assignment, presentation and disclosure of Depreciation and Amortisation, including those requiring attestation. 4. Definitions The following terms are being used in this standard with the meaning specified:- 4.1 Amortisation: Amortisation is the systematic allocation of the depreciable amount of an intangible asset over its useful life. It refers to expensing the acquisition cost minus the residual value of intangible assets such as Franchise, Patents a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substituted for historical cost in the financial statements, less the estimated residual value. 4.6 Depreciable fixed and Intangible assets are assets which: (i) are expected to be used during more than one accounting period; (ii) have a limited useful life; and (iii) are held by an enterprise for use in the production or supply of goods and services, for rental to others, or for administrative purposes and not for the purpose of sale in the ordinary course of business. Land is not a depreciable asset as it does not have a defined useful life. 4.7 Residual (salvage) value: Residual value is the amount which an enterprise expects to obtain for an asset at the end of its useful life after deducting the expected costs of disposal. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an intangible asset that arises from contractual or other legal rights shall not exceed the period of the contractual or other legal rights, but may be shorter depending on the period over which the entity expects to use the asset. If the contractual or other legal rights are conveyed for a limited term that can be renewed, the useful life of the intangible asset shall include the renewal period(s) only if there is evidence to support renewal by the entity without significant cost. The useful life of a re-acquired right recognised as an intangible asset in a business combination is the remaining contractual period of the contract in which the right was granted and shall not include renewal periods. The useful life of an intangible asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of depreciation to assign depreciable amount of an asset on a systematic basis over its useful life. For example: (a) Straight-line method; (b) Diminishing balance method; and (c) Units of production method. 5.12 The method of amortisation of intangible asset shall reflect the pattern in which the economic benefits accrue to entity. 5.13 The methods and rates of depreciation applied shall be reviewed at least annually and, if there has been a change in the expected pattern of consumption or loss of future economic benefits, the method applied shall be changed to reflect the changed pattern. 5.14 Spares purchased specifically for a particular asset, or class of assets, and which would become redundant if that asset or class of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f distribution of Depreciation and Amortisation to the cost objects. 2. Any credits/recoveries relating to Depreciation and Amortisation. 3. Additional Depreciation on account of revaluation of asset, which is not included in cost. 4. Amount of depreciation that is not included in cost because of temporary retirement of assets from production of goods and services. 8.2 Disclosure shall be made only where material, significant and quantifiable. 8.3 Disclosures shall be made in the body of the cost statement or as a foot note or in a separate schedule. 8.4 Any change in the cost accounting principles and methods applied for the measurement and assignment of Depreciation and Amortisation during the period covered by the cost statement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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