Abstract
M.Com.
This study examines the disclosure of depreciation in
company financial statements.
The following aspects were discussed:
a) The nature of depreciation.
Concepts for the measurement of depreciation can be
'classified under the following:
depreciation as a process of cost allocation
depreciation as a process of valuation
depreciation as a reservation of funds for the
replacement of assets.
b) The measurement of depreciation.
Both the depreciable amount ang the useful life of
fixed assets are factors taken into consideration
in the measurement of depreciation. The method
applied in the measurement as well as the problems
related to estimation are discussed.
c) The revaluation of fixed assets.
Maintenance of capital as the purpose of
revaluation, the determination of such value and
sUbsequent entry thereof into the financial records
are contemplated.
d) The disclosure
fixed assets
of depreciation and revaluation of
in the financial statements of
companies.
The prerequisites according to generally accepted
accounting practice are quoted and the application
in practice of same subsequently viewed. The
discussion clearly signifies that the relevant
documents issued by the SA Institute of Chartered
Accountants are clear and unambiguous. Yet, the
requirements of disclosure contained in these
documents are not adhered to in practice.