Exposure Draft ED/2012/5 Clarification of Acceptable Methods of Depreciation and Amortisation
(Proposed amendments to IAS 16 and IAS 38)

The International Accounting Standards Board (IASB) has published for comment ED/2012/5 an Exposure Draft of proposed amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets.

This amendment proposes to clarify that when applying the guidance in IAS 16 and IAS 38, a revenue-based method should not be used to calculate the charge for depreciation and/or amortisation. This is because such a method reflects a pattern of economic benefits being generated from the asset, rather than the expected pattern of consumption of the future economic benefits embodied in the asset. The proposed amendment also provides some further guidance in the application of the diminishing balance method.

The IASB has also decided to make consistent the phrase ‘units of production method’ and has therefore amended those instances of phrases ‘unit of production method’.

Comments can be made to the New Zealand Accounting Standards Board (NZASB) addressed to the Chairman, New Zealand Accounting Standards Board, PO Box 11250, Manners Street Central, Wellington 6142, or by email to submissions@xrb.govt.nz. Comments can also be made electronically to the IASB website (www.ifrs.org), using the ‘Comment on a proposal’ page.

Comments are due to the NZASB by 28 February 2013 and to the IASB by 28 March 2013.

Read IASB Exposure Draft 2012/5


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