Dep. slm

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Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2016 Hello Experts, please guide me.. abc limited has purchased machinery on 1/1/2015, we will calculate the dep. f of three month for FY 2014-15, or it will be calculate on 31/12/2015, also tell me on which day dep. entry will be passed Regard Anil yadav

Ankur Singhal

Ankur Singhal (Expert)
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08 January 2016 Dear
depreciation is calculated from the date of put to use.
Assuming that the machinery was put to use on same date, depreciation @ 15% p.a would be calculated for three months.
Depreciation entry is always passed on the last date of Financial year. i.e 31 march.

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2016 respected sir... please guide me on my two following query, 1) we were using formula (cost-residual value/useful life) under SLM plz tell me here depreciation rate is prescribed by company act. say 7.5% then how we calculate depreciation kindly explain with an example if possible,,2) weather even as per SLM the dep. is to be always charged on 31/3 hence as per my above query the dep will be charged for three month, jan, feb, march, am i right..

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Ankur Singhal

Ankur Singhal (Expert)
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08 January 2016 Dear
Yes you are right the depreciation will be calculated for jan, feb, march.
Now, when the rate is prescribed then we do not calculate the depreciation by the formula i.e cost - residual value/ life.
To calculate as per rate assume Rate 7.5% and the original cost is Rs.1000/-
now depreciation will be = 1000*7.5% = Rs.75 p.a.
now in slm the depreciation amount for each full year will be Rs.75/- now for the first year in our case the depreciation will be 75*3/12=Rs. 18.75/-.
and for following years depreciation would be Rs.75/-.

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2016 sir.. will residual value and useful life of assets will be ignore.. right..

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2016 sir plzz reply.. as per your above reply.. i.e. 1000*7.5, 75/- dep. will be charged every year in this formula will sv and useful life not be consider..... also tell me assume if asset is purchase on 5/1/2015 then at year ending 31/3/2015 weather dep. will be calculate day wise or this january will be ignored.... plzz reply.. it's really urgent

Ankur Singhal

Ankur Singhal (Expert)
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08 January 2016 no depn will not be calculated daywise.
also pls refer my above reply again for your rest of query.

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2016 sir. i have read your above reply in which you have calculated dep. 75 for every year please tell does that means sv and asset useful life will not be consider in this mathod..

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Ankur Singhal

Ankur Singhal (Expert)
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08 January 2016 Deay yes they will not be considered.
Practically the method of calculating depreciation is not used.
SLM is always calculated on the rates given in practical life.

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2016 sir thanks a lot for resolvation my query..