Sample Disclosure – Change In Accounting Policy On Non-amortisation Of Plantation Development Expenditure (24 August 2009)

Non-amortisation of Plantation Development Expenditure

With effect from 1 April 2008, planting expenditure incurred on newly developed land capitalised under plantation development expenditure is not amortised. Replanting expenditure of similar crops on former developed areas is chargeable to the income statement in the financial year it is incurred. In the opinion of the directors, the change in accounting policy provides reliable and more relevant information. This change in accounting policy has been accounted for retrospectively. Previously, amortisation was provided on plantation development expenditure of matured areas. The following table provides the extent of the change in accounting policy on the income statement and balance sheet had the previous policy been applied in the current year:

Effect on income statement for the year ended 31 March 2009  
 

RM

Increase in cost of sales

500,000

Decrease in profit before tax

500,000

Decrease in tax expense

125,000

Decrease in profit for the year

375,000

   
Effect on balance sheet as at 31 March 2009  
 

RM

Decrease in plantation development expenditure

500,000

Decrease in deferred tax liability

125,000

Decrease in retained earnings

375,000

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