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Is depreciation an accounting policy or accounting estimate?

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Question added by Mubashir Shahzad , Oracle Functional Consultant/ERP Business Analyst , Jaffer Business System
Date Posted: 2014/06/26
Ahmad omar
by Ahmad omar , Senior Accountant , Backaldrine Arab Jordan

Dear Sir

Kindly,note that deprecication is a method of destribute the cost of tangable assets during usefullife,there are many acceptable methods of depreciation for example Straight line method or sum of digit years , Depreciation is an estimate,becuase there is many methods to use in order to calculate yearly amount of depreciation expense , on other hand,Policy is a managment Decision to use a suitable estimattion or decision of Selection the best estimation method in order to show it's financail statements   

Pacifico Rebollos
by Pacifico Rebollos , Accountant , Kory Tyres LLC

Technically, depriciation is an accounting estimates. But it is also correct to say that depriciation is a matter of accounting policy because it is a must to depriciate our long-term assets to reflect proper distribution of expenses.

Divyesh Patel
by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Depreciation is  Accounting Estimates.

change in depreciation method is not a change in accounting policy rather it is a change in accounting estimate. Change in accounting policy only occurs if rules of either recognition, measurement or presentation of line item are changed. Change in depreciation method changes neither of these. Therefore, it is a change in accounting estimate.

Muhammad Fiaz
by Muhammad Fiaz , GROUP MANAGER ACCOUNTS, FINANCE AND TAX , SMPL Group of Companies

Estimate

Ammad Buzdar
by Ammad Buzdar , Accountant , International Knee and Joint Centre

estimate not policy

Rashad Moursi
by Rashad Moursi , Finance Director & Business Development, International Business Transformer Owners Repr. - Hotels , Investment and financial

Depreciation is an accounting policies and accounted by estimates method 

fahid saleem
by fahid saleem , Account/Admin Office - Executive Assistant , Studio65 srl

Depreciation is an accounting estimate to determine the exact value of the Assets. 

Muhammad Hassan khan
by Muhammad Hassan khan , Assistant Collector , Khyber Pakhtunkhwa Revenue Authority

Depreciation is an account policy i.e. we have two types of accounting policy1) Cost base2) fair valuue

when we follow Cost base then we calcuate deprecation as per matching and accrual concept. And the way depreciation is carried out i.e. Striaight line, Double Straight Line, Reducing balance method and some of digit method is accounting estimte.

If estimte is changed in this instance e.g. from straight line deprection to reducing balance method then the affect is prospective but if the Accounting Policy is changed to Fair value method from cost base then the change will be retrospective and have to adjust the prior figure as well

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