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Basic concept of change of method without retrospective effect with the help of a full question. Also explained why retrospective effect is necessary.

Question Information:
A limited company purchased on 01.01.2010 a second hand plant for Rs.36,000 and immediately spent Rs.24,000 on its overhauling. On 01.07.2010 additional plant costing Rs.30,000 is purchased. On 01.07.2012 the plant purchased on 01.01.2010, having become obsolete is sold for Rs.12,000 and on the same date fresh plant is purchased at a cost of Rs.72,000.
Depreciation is provided @ 10% per annum on original cost on 31st December every year. In 2013, However, the company changes the method of providing depreciation and adopts the method of writing off 15% per annum on the diminishing balance method. Show the Plant Account from 2010 to 2013.

Student can also watch following lectures related with 'Accounting for Depreciation' :
1. Provision for Depreciation A/c and Asset Disposal A/c -
   • Provision for Depreciation A/c and As...  

2. Sale of a Part of Machine -
   • Video  

3. Change of Method with Retrospective Effect -
   • Change of Method with Retrospective E...  

4. Provision for Depreciation A/c and Asset Disposal A/c -
   • Provision for Depreciation A/c and As...  


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