A company has been charging depreciation @ 10% p.a on original cost method. It now wants to change the method from original cost to diminishing balance method; the rate of depreciation is 15% p.a. Can it do so?
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Yes. The method and the rate of depreciation can be changed but the change in method will be treated as a change in accounting policy and the company should disclose the change in its financial statement along with its impact on profit or loss.
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