Question

    A machine costing ₹8,00,000 has a salvage value of

    ₹80,000 after 10 years. The company follows Straight Line Method (SLM). During the 4th year, it switches to Written Down Value (WDV) method for better matching of cost and benefit. What should be the correct accounting treatment?
    A Continue with SLM as per consistency principle Correct Answer Incorrect Answer
    B Retrospectively adjust previous depreciation Correct Answer Incorrect Answer
    C Treat it as a change in accounting estimate prospectively Correct Answer Incorrect Answer
    D Charge additional depreciation in current year to adjust Correct Answer Incorrect Answer

    Solution

    Change in depreciation method is treated as a change in accounting estimate and applied prospectively as per Ind AS 16.

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