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Explain the accounting convention which has been violated

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Reference no: EM132547798

Auditor John Luck was auditing the accounting statements of Peter&Peter company. He had following observations.

Question 1: Peter&Peter Company purchased a machine on 1st January,2016 for $50,000. Depreciation at the rate of 20% was charged on machine for two years. From first January 2019 the rate of depreciation was reduced to 10%. This change was not mentioned in the financial statements or notes. Is this a violation? If this is a violation explain the accounting convention or concept which has been violated.

Reference no: EM132547798

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