Harmonization of Depreciation Policy

Abstract

The objective of this study is to examine the depreciation methods adopted by different companies listed in Dhaka Stock Exchange (DSE). Besides, the study also attempted to check the consistency in depreciation policy application and harmonization with authoritative accounting practices in the context of Bangladesh. A random sample of 120 companies across different sectors was examined to determine the depreciation method currently practiced in the country. This study revealed that declining balance of depreciation is the most commonly practiced method in most of the sample companies. Nonetheless, straight line depreciation method follows close behind. Moreover, it has been observed that only a few companies adopt both methods in the calculation of depreciation. Additionally the results also indicated a certain level of disharmony among companies within the same industry. Furthermore, it has also been observed from the research that the companies are very consistent regarding their practice of depreciation method.