Accounting Standard 6: Depreciation Accounting

Hey students..

I am going to tell you about the AS-6 i.e. Depreciation Accounting. Depreciation is nothing but distribution of total cost of asset over its useful life. It is a measure of wearing out, consumption or other loss of value of a depreciable asset arising from use, passage of time.

Now the question arises, "what is the meaning of depreciable assets?". Students assets should fulfill the following conditions to become "depreciable asset"

(1) which are expected to be used for more than 1 accounting period, and

(2) have a limited life, and

(3) are held for use in production of goods & services.

Now the question arises that " is this AS applicable on all depreciable assets?". Students this AS is applicable on all depreciable assets except FORESTS, PLANTATION, MINERALS, NATURAL GAS, EXPENDITURE ON DEVELOPMENT, GOODWILL & LIVE STOCK ( ANIMAL HUSBANDRY).

While calculating cost of depreciable asset cost spent in connection with its acquisition, installation, any commission paid, installation of additional item should be considered. The useful life of the depreciable asset is the period over which it is expected to be used by the enterprises. Generally useful life shorter than the actual or physical life.

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 Nitin Bhalla @ 9873029766, 9958641376