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Non-pro rata earning approaches are generally more complex and involve more estimation than pro rata approaches. As such, the accounting rules may allow the more simplistic pro rata methods to be used where the impact is not material to the financial statements. Earning of deposits, other adjustments There may be multiple possible approaches for earning items such as deposits, interim audits 11 and other such premium components. Where the accounting system does not dictate the earning approach, the overall goal would normally be to choose an approach that focuses on the total earned premium, with as simple. | 56 Accounting Standard AS 6 Depreciation Accounting Contents INTRODUCTION Paragraphs 1-3 Definitions 3 EXPLANATION 4-19 Disclosure 17-19 MAIN PRINCIPLES 20-29 Accounting Standard AS 6 Depreciation Accounting This Accounting Standard includes paragraphs set in bold italic type and plain type which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the context of the General Instructions contained in part A of the Annexure to the Notification. Introduction 1. This Standard deals with depreciation accounting and applies to all depreciable assets except the following items to which special considerations aPply i forests plantations and similar regenerative natural resources ii wasting assets including expenditure on the exploration for and extraction of minerals oils natural gas and similar non-regenerative resources iii expenditure on research and development iv goodwill and other intangible assets v live stock. This standard also does not apply to land unless it has a limited useful life for the enterprise. 2. Different accounting policies for depreciation are adopted by different enterprises. Disclosure of accounting policies for depreciation followed by an enterprise is necessary to appreciate the view presented in the financial statements of the enterprise. Definitions 3. The following terms are used in this Standard with the meanings specified 58 AS 6 3.1 Depreciation is a measure of the wearing out consumption or other loss of value of a depreciable asset arising from use effluxion of time or obsolescence through technology and market changes. Depreciation is allocated so as to charge a fair proportion of the depreciable amount in each accounting period during the expected useful life of the asset. Depreciation includes amortisation of assets whose useful life is predetermined. 3.2 Depreciable assets are assets which i are expected to be used during more than one accounting period and ii
