Husain Raja asked 4 years ago
Sir as you’ve pointed out in an MCQ regarding different accounting treatment in standalone financial statements of component and holding co. regarding method of depreciation and as per solution diff. treatment is allowed for consolidation, I would like to point out that it’s method of accounting and not a significant accounting policy that’s y institute has taken that view which appears inconsistent with harmonizing the accounting policy..
Ravi Staff answered 4 years ago
Depreciation policy can be different for same class of asset even if they are in same company, if conditions or nature of use are different. for example 1 factory can be in dry area and other factory can be in costal area, factory in costal area may be depreciated in accelerated manner because of moisture content.
If policy can be different in same entity it can be different in holding and subsidiary as well.