Depreciation

Depreciation

DEPRECIATION

Ascertain for each class of fixed asset the basis of provision for depreciation, i.e., whether (1) depreciation is written off annually, (ii) no depreciation is provided but renewals are charged against revenue, or (iii) no depreciation is provided because none is necessary (land and buildings).

You will be able to judge from this whether assets are being adequately or excessively written down. If plant and machinery are given a very high writing down (i.e., substantial depreciation provision), this means that the 'written down' figure (website value) could well contain an element of hidden reserve.

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