Day: December 27, 2021

General Principles Verification of assets is an important audit process : by convention its scope has been limited to inspection of assets, where it is practicable, and collection of information about them on an examination of documentary and other evidence Read More …

A specific reserve is created for some definite purpose out of the profits of the company. The purpose may be any thing connected with the business which the Article of Association or the directors want to be provided for, such Read More …

Reserves are amounts appropriated out of profits which are not intended to meet any liability, contingency, commitment or diminution in the value of assets known to exist at the date of the Balance Sheet. In contradistinction, provisions are amounts charged Read More …

Beside charging annual depreciation on assets by the reason of normal wear and tear, afflux ion of time and obsolescence to re-instate the correct value of the assets considering the future cash flows that then asset can generate, impairment loss Read More …

In recent years, due to an abnormal rise in the price level, it has been suggested in many quarters that accountants should modify the practice that so far prevailed of calculating the provision for depreciation on historical cost (i.e., original Read More …

Apart from fixed assets in respect of which depreciation must be provided in the manner a forementioned, it also has to be provided on semi-permanent assets, e.g., patents, trade marks, blocks and dies, etc. Since the auditor is not in Read More …

Section 205(1) prescribes that if a company has not provided for depreciation for any previous financial year it shall, before declaring, or paying dividend, provide for such depreciation : either out of the profits of that financial year, or  out Read More …

On account of the provision under section 205 that, no dividend shall be declared except out of profits arrived at after providing for depreciation in accordance with the provisions of the Act, it has become obligatory for every company distributing Read More …

Clause 3(iv) of Part II to Schedule VI to Companies Act, 1956 provides that the Profit and Loss Account must disclose the amount of depreciation, renewals or diminution in value of the fixed assets. If such a provision is not Read More …

The Department of Company Affairs (Now Ministry of Company Affairs), Government of India, issued a notification during December 1993, which has inserted as Note No. 8 in Schedule XIV to the Companies Act, 1956. Not withstanding anything mentioned in Schedule, Read More …