Sometimes examination problem may require the change in method and rate of charging depreciation. Such a change may be effective from the year of change or from the back date, i.e., retrospectively. When the change is to be made effective from the current accounting period, no adjustment is required in the amount of depreciation already charged. However, it should be carefully noted that the change in the current year means the change on the last date of accounting period. Therefore if some asset is sold during the year of change, the additional depreciation on this asset for part of the year would be charged at the old rate and old method. For Example, if the rate and the method of depreciation are to be changed in the accounting period ending on 31st December 1998 and the asset is sold on 1st July 1998, the depreciation on such sold out asset would be charged at old rate and old method. The procedure for recording the change of rate and method of depreciation from the back date may be noted as under:

(i)    Calculate the total depreciation on the existing assets only from the back date at new rate and method.

(ii)    Compare it with the total depreciation already charged.

(iii)    The difference, if any, would be debited/credited to the depreciation of profit and loss account in the asset account or provision for depreciation account, if asset account is being maintained at the original cost.

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