Component Depreciation in Real Estate Companies -Did the Outcome during the Implementation of K3 Meet the Expectations?

Abstract: Background and Problem: In 2014 the transition to the K3 regulation became mandatory to many companies. Many companies in the real estate industry have been negative towards the change to component depreciation since it would demand a big increase in workload. Due to the dissatisfaction with the new regulation many comment letters have been sent, but the companies do not feel that they have been taken into consideration. Aim of study: This thesis investigates how the perception of the advantages and disadvantages has changed during the implementation as well as what the effects of the accounting has been. It is also analyzed how the implementation process might have affected the perception towards the component depreciation in K3. Methodology: Qualitative interviews have been conducted to study how the perceptions of component depreciation among the companies within the real estate industry have changed during the implementation and what the effects on the depreciation are. This information has then been analyzed with relevant theories. Analysis and Conclusion: The component depreciation has advantages such as providing more information of the assets internally, enhancing the collaboration between different departments and enabling more maintenance. Still, these advantages are not seen as significant and do not overweight the administrative costs of the implementation of component depreciation and the comparability between companies has decreased. The lack of guidelines and coherent directions of how to implement the component depreciation has affected the credibility of the system and even though it has been accepted the companies are still not convinced that it is beneficial.