Accounting Standard 6
The following is the text of the revised Accounting Standard (AS) 6,‘Depreciation Accounting’, issued by the Council of the Institute of CharteredAccountants of India.* Accounting Standard (AS) 6, Depreciation Accounting, was issued by the Institutein November 1982. Subsequently, in the context of insertion of Schedule XIV in theCompanies Act in 1988, the Institute brought out a Guidance Note on Accounting forDepreciation in Companies which came into effect in respect of accounting periodscommencing on or after 1st April, 1989. The Guidance Note differed from AS 6 inrespect of accounting treatment of (a) change in the method of depreciation, and (b)change in the rates of depreciation. It was clarified in the Guidance Note, with regardto the matter at (a), that AS 6 would be revised to bring it in line with the recommendationsof the Guidance Note.Based on the recommendations of the Accounting Standards Board, the Councilof the Institute at its 168th meeting, held on May 26-29, 1994, decided to bring AS 6in line with the Guidance Note in respect of both of the aforementioned matters.Accordingly, it was decided to modify paragraphs 11, 15, 22 and 24 and delete paragraph19 of AS 6. Also, in the context of delinking of rates of depreciation under theCompanies Act from those under the Income-tax Act/Rules by the Companies(Amendment) Act, 1988, the Council decided to suitably modify paragraph 13 of AS6. An announcement to this effect was published in the August 1994 issue of TheChartered Accountant (pp. 218-219).AS 6 is mandatory in respect of accounts for periods commencing on or after1.4.1995. Reference may be made to the section titled ‘Announcements of the Councilregarding status of various documents issued by the Institute of CharteredAccountants of India’ appearing at the beginning of this Compendium for a detaileddiscussion on the implications of the mandatory status of an accounting standard.From the date of Accounting Standard (AS) 26, ‘Intangible Assets’, becomingmandatory for the concerned enterprises, this Standard stands withdrawn insofar asit relates to the amortisation (depreciation) of intangible assets (See AS 26).1Attention is specifically drawn to paragraph 4.3 of the Preface, according to whichAccounting Standards are intended to apply only to items which are material.