Currently on Dynamix, we have fixed assets with a depreciation profile set up with a straight-line depreciation method, and the business needs to change this method from straight-line to straight-line with remaining period. I've tested everything, and the calculations and depreciations are accurate and correct. The only thing I'm unsure about is whether legally we have the possibility to change the depreciation method for an asset that is already partially depreciated and during the year, or if we can only change it at the beginning of the fiscal year, for example, I have to close last year with the old depreciation method and change the depreciation method starting from January 2024 and calculate the depreciation based on this new method. Or, is it not possible to change depreciation methods for an asset that is already partially depreciated?/
Changing Depreciation Method for Partially Amortized Assets: Legal and Practical Considerations
1. Hi From finance point of view as per IAS 8 you can change the accounting policy once its required by the IFRS or new policy results in more reliable information.
2. Then you can consider either this should be treated as retrospectively or Prospectively.
3. As the change in depreciation method is change in accounting estimate so, you can treat it prospectively but if it changes useful life consider it for current and future reporting period.
Changing Depreciation Method for Partially Amortized Assets: Legal and Practical Considerations
Hi,
I think there is no problem in changing the method but just asses then impact for new method for whole year? Sometimes there are minor diofferences during the year
Changing Depreciation Method for Partially Amortized Assets: Legal and Practical Considerations
Hi,
You'll need to consult with your company's legal counsel and accounting professionals to ensure compliance with relevant laws and regulations. Before making a change, you need to carefully consider the possible impact of the change, and you may need to adjust historical financial data.
Changing Depreciation Method for Partially Amortized Assets: Legal and Practical Considerations
Hi,
If the accounting is correct, you may ask this legal question to the audit team of the organization, ideally there is no issue because this is very normal, in any fiscal year govt might change the depreciation policy so it can be changed technically.
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