M/s ABC Brothers, which was registered in the year 2000, has
been following Straight
Line Method (SLM) of depreciation. In the current year it
changed its method from
Straight Line to Written Down Value (WDV) Method, since such
change would result in
the additional depreciation of Rs. 200 lakhs as a result of
which the firm would qualify
to be declared as a sick industrial unit. The auditor raised
objection to this change in
the method of depreciation.
The objection of the auditor is justified because
(a) Change in the method of depreciation should be done only
with the consent of
the auditor
(b) Depreciation method can be changed only from WDV to SLM
and not vice versa
(c) Change in the method of deprecation should be done only
if it is required by
some statute and change would result in appropriate
presentation of financial
6
statement
(d) Method of depreciation cannot be changed under any
circumstances
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Answer / Vaseem Ahmad
The auditor's objection is justified because Depreciation method cannot be changed under any circumstances without proper justification and approval.
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