About depreciation under IAS 16

[Jay001]

Hey good people

Regarding to the depreciation under IAS 16, when could I accrue the depreciation for the new acquired PPE, for example, a firm acquired an equipment in 10 January 2012, do I need to recognize the depreciation for the new equipment at 31 January 2012, or start the depreciation not in the month but the following month?

Thanks

 

[mike99]

(If the machine is to be depreciated under the "usage method" (i.e. per no. of units produced, say), then the following does not apply.)

In terms of IAS 16, depreciation begins when the machine is ready for its intended use ("when it is in the location and condition necessary for it to be capable of operating in the manner intended by management"), regardless of whether it is actually used by the company or not.

If it is ready for its intended use on 10 January, start depreciating on 10 January (20/31 days). If it is ready for its intended use on 31 January, start depreciating on 31 January.