Hi all,

Been pondering over this for a long time, but still don't get it why

1)Why many hotels, banks and building societies that have large property portfolios are known to resist the requirement to depreciate buildings? Does it involve any FRS ?

2) What observations are made regarding the portrayal of financial position and
Performance under LIFO,FIFO and weighted average methods when prices are increasing?
What does it mean by the financial position & performance? What observations are there?

Need help on this urgently.. thanks all..

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Originally Posted by wanye

1)Why many hotels, banks and building societies that have large property portfolios are known to resist the requirement to depreciate buildings? Does it involve any FRS ?

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What is FRS?

If you depreciate your buildings, your assert value goes down and in turn your equity goes down. If companies have large buildings, they want to be able to show that without it taking something away from equity.

Quote:

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Originally Posted by wanye

2) What observations are made regarding the portrayal of financial position and
performance under LIFO,FIFO and weighted average methods when prices are increasing?
What does it mean by the financial position & performance? What observations are there?

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If prices are rising, than LIFO will lead to higher costs for the period and a lower inventory value.

Reverse is true if FIFO is used, higher inventory, lower costs.

Weighted average is in the middle.

Hi Cptforest, FRS is financial reporting standard, is any particular FRS for non depreciation?
Actually the non depreciation is for the land or buildings OR for both?

Land is NEVER depreciable.

Buildings, Cars, Equipment are.


I would just depreciate it at the CCA rate, saves times when it comes to doing your taxes. But dependent on the type of company (public vs. private), CCA might not necessarily reflect management's wishes.