+- Accountancy Forum (https://www.accountancy.com.pk/forum)
+-- Forum: The Profession (https://www.accountancy.com.pk/forum/forum-the-profession)
+--- Forum: Accounting and Audit (https://www.accountancy.com.pk/forum/forum-accounting-and-audit)
+--- Thread: accounting treatment of assets fully depreciated (/thread-accounting-treatment-of-assets-fully-depreciated)
accounting treatment of assets fully depreciated - bilal hanif - 10-10-2011
AOA...kindly anybody tell me what will be the accounting treatment or solution of the assets that are fully depreciated and still appearing in the FAR and how we can remove these assets from FAR as they are depreciated
- kamranACA - 10-15-2011
Depreciation is only an accounting estimate to consume the cost of assets over their estimated useful life. However, due to many practical reasons, including non-revision of useful life estimates, the assets dont become unservicable at the time they are fully depreciated. In other words, the assets are usually still usable at the time they are fully depreciated.
However, this only happens when you are following Cost Model. In case of Revaluation Model, you can again get such assets revalued on fair values.
Due to this, there is no reason to oust such assets from the Fixed Assets Quantitative Records (FAR), even if their WDV is Nil or say, is Rs. 1. Because this would be the only internal control and check on and safeguard to such assets against mis-use, misplacement or misappropriation.
Such assets would keep on to be productive until their usage is not stopped. When these will be scrapped, sold or destroyed, written off under required approval, these can be deleted from the FAR after charging to profit and loss a account.
In case of categorizing as held for sale, these will be treated under IFRS-5 (if applicable under the circumstances), but will continue to be kept in memorandum quantitative record until eventually sold.
Regards,