11-28-2011, 02:05 AM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Information Consultant</i>
<br />What is the accounting treatment for the following
an asset that is fully depreciated,but still working and we going to purchasing a part will increse Efficiency will we capitalise this amount of additinal part ? if yes what is the lifetime for this ?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Assalam u Alaikum..
Dear..
If your asset is fully depreciated, but is still in working condition means that your estimate for its useful life was incorrect. You simply have to revise the estimate. Just evaluate the new useful life of the asset and start depreciating it in the normal way! no complex issue here.
Now, when you add some parts which are likely to increase the efficiency of the asset, it will surely get capitalized and its useful life will be merged in the useful life of the asset. Your estimate of useful life is likely to be changed after this new installation. but what would be the useful life is a case specific matter. you have to consider many factors such as the intended use of the asset by management, change in technology or methods etc etc...
Regards
Nabeel Munawar
<br />What is the accounting treatment for the following
an asset that is fully depreciated,but still working and we going to purchasing a part will increse Efficiency will we capitalise this amount of additinal part ? if yes what is the lifetime for this ?
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Assalam u Alaikum..
Dear..
If your asset is fully depreciated, but is still in working condition means that your estimate for its useful life was incorrect. You simply have to revise the estimate. Just evaluate the new useful life of the asset and start depreciating it in the normal way! no complex issue here.
Now, when you add some parts which are likely to increase the efficiency of the asset, it will surely get capitalized and its useful life will be merged in the useful life of the asset. Your estimate of useful life is likely to be changed after this new installation. but what would be the useful life is a case specific matter. you have to consider many factors such as the intended use of the asset by management, change in technology or methods etc etc...
Regards
Nabeel Munawar
