ABC Company has been in the business of manufacturing yarn. Five years ago, the company purchased machinery worth Rs. 100 million, with a residual value of Rs. 10 million and useful life of 10 years. The company implemented a straight-line method for charging depreciation for the first five years. Recently a new CEO, Mr. Hamid, has been hired, and he advised the accountants to use the double-declining method for charging depreciation expenses.

Requirement:

You are advised to comment if the company adopts a new depreciation method for reporting, then in such case, which accounting principle is violated, and in order to justify the change, which accounting principle is required to be followed.