CA Inter P1 · Chapter 5 · Question 5 of 12
Case: Ambika Plastics Ltd changes its method of depreciation on plant from the written-down value method to the straight-line method to better reflect the expected pattern of consumption of benefits. Under AS 10 read with AS 5, this change is treated as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A change in accounting estimate, applied prospectively
Explanation
AS 10 (Revised) requires the depreciation method to be reviewed and, if the expected pattern of consumption has changed significantly, to be changed; such a change is accounted for as a change in accounting estimate in accordance with AS 5. It therefore affects the current and future periods only, with no retrospective recalculation.
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