Component depreciation in real estates will the burdens in practice only be leveled up by benefits in theory

Seminar date: 2012-05-30 Course: BUSN69 Business Administration: Degree Project – Accounting and Auditing Authors: Mathias Andersson and Fredrik Aprili Advisor: Kristina Artsberg Five key words: Depreciation, component depreciation, K3, real estate and standard-setting. Purpose: Our purpose with this thesis is to reveal the effects that component depreciation can have on Swedish non-listed real estate entities and why there is such great opposition among the preparers. Methodology: We have done a qualitative study and our aim has been to approach our research questions and fulfil our purpose by using an inductive strategy. Literature in the frame of references has been used to analyse our empirical findings in order to draw conclusions. Theoretical perspectives: We have used previous studies about the Swedish accounting development to give an explanatory value to how Swedish standard-setters are influenced by practitioners. Our starting point is to have a perspective that explains why practitioners are reacting to new standards by using studies about standards development and lobbying. Empirical foundation: Exists of comment letters, interviews and illustrations on corporation’s financial statements by using two component models. Comment letters from different organizations and companies regarding our study has been gathered. Suitable respondents to our study have been non-listed real estate’s companies, organizations and an expert. Financial statements from non-listed real estate’s companies have also been used as a basis for our calculations and illustrations. Conclusions: There is no substitution to professional judgment when determine components in real estates and together with a recommendation derived from the business and regulation adjusted for ease the transition period the uncertainty in how to determine a component will be mitigated. Practical burdens have been successfully claimed when influencing Swedish standards-setters through history. We conclude that the reluctance seen in the real estate business is derived mainly from economic consequences when trying to influence the standard-setter instead of calming the practical hardship