Tangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided at rates calculated to write off the cost of the fixed assets, less their estimated residual value, over their expected useful lives.
No depreciation is provided on freehold investment property. This treatment is a depature from the Companies Act 2006, whic requires all assets to be depreciated. Howerver, the director considers that the calculation of systematic annual depreciation would fail to give a true and fair view of investment property for which the current value, and changes in that value are of prime importance. The accounting policy adopted is therefore necessary for the financial statements to give a true and fair view.
If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of the freehold property, the depreciation is revised prospectively to reflect the new estimates.