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Just Other Articles - Determination Of Depreciation
Therefore, the going concern and financial period principles underlie the depreciation process. Fixed assets, in other words, merely represent deferred expens
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
es and the depreciation process is simply a means of allocating the deferred expenses to the correct financial period. Thus, with depreciation the emphasis is
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
on systematic and realistic apportionment of the expenses involved in using the fixed assets. Accordingly, the accounting balance sheet does not show the curr
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
ent market value of fixed assets, nor does the depreciation provided measure the decrease in value over a period.
The concept of depreciation as used in accou
The concept of depreciation as used in accou
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
ting does not imply the physical ageing of an asset. Depreciation is simply a process of apportionment and not a process of valuation. The depreciation provi
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
ed fro a specific period is that portion of the total cost price of an asset allocated by this process to the period concerned.
It is not always easy to deter
It is not always easy to deter
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
mine what portion of the depreciable amount of a fixed asset must be allocated to any specific period, since a variety of factors have to be taken into conside
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
ation. The following are significant factors:
Cost price - cost is the purchase price plus any additional expenses necessary to prepare an asset for use. Li
Cost price - cost is the purchase price plus any additional expenses necessary to prepare an asset for use. Li
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
espan of an asset - the lifespan of an asset cannot be determined in advance and must, for accounting purposes, be estimated. This requires judgement, which i
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
s usually based on experience with similar assets. The present condition of the asset and the company's policy regarding the replacement of assets will also b
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
determining factors. The lifespan of an asset can be measured in terms of time (duration of the asset's use), production (the total number of units an asset
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
s expected to produce), or service (e.g. the distance it will travel), or some similar criterion.
It is usual to distinguish between the technical lifespan o
It is usual to distinguish between the technical lifespan o
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
f a fixed asset and its economic lifespan. The technical lifespan is determined by factors relevant to the particular asset concerned. The technical lifespan
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
of an asset terminates when it can no longer provide the service for which it was acquired, or maintenance costs become prohibitive. The economic lifespan is
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
etermined by external factors such as technological advancements (e.g. modernised production methods and changing fashions) and terminates, for example, when t
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
he asset's production capability becomes uneconomical because of such technological advancements.
Due to rapid technological development, the economic lifespa
Due to rapid technological development, the economic lifespa
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
of an asset is often shorter than its technical lifespan. However, an asset whose economic lifespan has expired may be used for other purposes. The shorter
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
f either the economic or the technical lifespan of an asset is regarded as its lifespan.
For accounting purposes, the useful lifespan of important depreciable
For accounting purposes, the useful lifespan of important depreciable
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
assets should be reviewed periodically. Depreciation rates for current and future periods should be adjusted if the revised expected useful lifespan differs
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
aterially from the previous estimation. If necessary, the effect of such a change should be disclosed in the accounting period in which the change takes place
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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