Straight line depreciation

KaelaH
KaelaH Well-KnownFMAAT, AAT Licensed Accountant Posts: 131
When calculating the depreciation in straight line method, would you apportion the depreciation depending on what month the asset was purchased in the year or would you calculate a full years depreciation regardless?
I have always started calculating depreciation in the month the item was purchased but when studying ATT i notice the calculations are always done on the full year. Am i making work for myself unnecessarily or is it better to be more accurate?

Comments

  • Monsoon
    Monsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Standard rule is full depn in the year of acquisition and none in the year of disposal.
  • KaelaH
    KaelaH Well-Known FMAAT, AAT Licensed Accountant Posts: 131
    Thanks Monsoon

    I'd always worked it out to the nearest month since thats how I did it when i worked in industry and were reporting to Head Office monthly.
    Makes my life a whole lot easier
  • Monsoon
    Monsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    KaelaH wrote: »
    Thanks Monsoon

    I'd always worked it out to the nearest month since thats how I did it when i worked in industry and were reporting to Head Office monthly.
    Makes my life a whole lot easier
    I think you're allowed to do it as you've said, I think that's probably an internal decision and for the size of clients we deal with, I think the standard is just fine (and indeed, far simpler!) :)
  • jamesm96
    jamesm96 Experienced Mentor Registered Posts: 523
    Monsoon wrote: »
    Standard rule is full depn in the year of acquisition and none in the year of disposal.

    Yep that's exactly how we do it too. Monthly dep'n charge is only relevant if you're preparing monthly management information.
  • deanshepherd
    deanshepherd Font Of All Knowledge Registered Posts: 1,809
    It's down to the depreciation policy of your client as to what you do. Of course when you're dealing with small clients we generally dictate that policy to them, so pick an easy one!

    I sometime do a monthly calculation where the client buys a massive asset at year end and I want to show a better profit figure, but 99% of the time it will be annual.
Privacy Policy