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Which is the best way to charge depreciation in these options...1. Monthly2. Quarterly3. Semi Annual4. Annual
it depends on your financial reporting cycle,
if you're reporting quarterly then depreciation is charged quarterly,
if you're reporting monthly then depreciation is charged monthly.
and so on.
. the best way to charge depreciation in these options: 1. Monthly2. 4. Annual
if you are using straight line method then annually depreciation calculation will be best
The best Answer added by: Muhammad Kassab Senior Accounts Executive 23 hours ago
thanks for invitation
the more common used method and the easier but not the ideal one straight line method it should be used when accounting period ended
I need to type alot for your TWO WORDS Question :)
First Depreciable amount is the Cost minus residual value which is calculated systematically and then recorded in the books (IAS-)... now this statement further needs clarification about the word "systematically" and the "Residual Value", this is where even Law permits us to keep multiple sets of financial reporting...
first can be Management Accounts and second can be regulatory financial statements. in your management accounts you can define your own Systems to value the depreciable amount using your own yard-stick. but for regulatory reporting requirements you need to follow the the Schedules prescribed by the TAX AUTHORITIES... like in Pakistan you need to follow the "Third Schedule" of income tax ordinance.
For better reporting purpose normally depreciation is made part of financial statements for any custom defined accounting periods. For internal reporting purpose you can do it on Monthly basis but for regulatory purposes you need to do it on Quarterly basis. If the asset is bought in the first days of a month then its depreciation will be charged for the whole month but if the asset is bought and made available for use in the last days (second half) of the month then for reporting purpose only% of the monthly depreciation value will be recognized in reporting.
Now a days it is also a practice to revalue the assets after a certain period of time (3 or5 years) and this disclosure is also required in the regulatory financial statements and any surplus or loss will be materialized for keeping the value closer to recoverable cost.
It is always good to use Management Accounting System, apart from regulatory accounts, as a tool for handling the expense recognition so that management can have reports for better decision making.
Best Regards
Monthly is the best option for user.
