BIR Ruling [DA-436-04]

August 12, 2004 BIR RULING [DA-436-04] Rev. Regs. No. 2; IAS 16 BIR Ruling No. DA-413-2004 Castelo Law Office 4/F, Rgc Bldg., 219 Apo St. Mandaluyong City Attention: Atty. Eduardo G. Castelo Gentlemen : This refers to your letter dated August 2, 2004 stating that BIR Ruling No. 413-2004 dated July 30, 2004 was issued to your client, Solid Shipping Lines Corporation; that in said ruling, your client was allowed to use the appraisal fair market values of their property, plant and equipment used in business as determined and reported by an independent appraiser, and accordingly depreciate, the same based on their remaining estimated useful life as re-estimated in the light of the subsequent facts or the straight-line method of depreciation pursuant to Section 109 of Revenue Regulations No. 2; that based on the foregoing, your client, by way of clarification and particulars, request for confirmation whether by virtue of the above-cited ruling, they could now state their property, plant and equipment used in business at their appraisal fair market values in their balance sheet and accordingly depreciate them for income tax purposes, charging depreciation expenses therefor, based on their remaining useful life as re-estimated or the straight-line method of depreciation used by Solid Shipping Lines Corporation. In reply thereto, please be informed that BIR Ruling No. 413-2004 dated July 30, 2004, in effect, grants to your client, Solid Shipping Lines Corporation, the authority to state in their balance sheet the appraisal fair market values of their property, plant and equipment used in business as determined and reported by an independent appraiser, and accordingly to depreciate the same, for income tax purposes, based on their remaining estimated useful life as re-estimated in the light of the subsequent facts or the straight-line method of depreciation pursuant to Section 109 of Revenue Regulations No. 2 and Section 34(F)(1) of the Tax Code of 1997. Please be guided accordingly. HSaCcE Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service