Depreciation on certain assets
This query is : Resolved
01 July 2011
I want to know how to recognize and account for depreciation on an asset which has limited usage.
For example a photographer's camera can operate for 500000 clicks after that it becomes useless. If the photographer clicks 500000 pics in a single financial year then how to recognize it in books and what if it is fully utilized in 1.5 years.
For example a photographer's camera can operate for 500000 clicks after that it becomes useless. If the photographer clicks 500000 pics in a single financial year then how to recognize it in books and what if it is fully utilized in 1.5 years.
01 July 2011
in this case the depreciation will be on the basis of age of the assets. You need to estimate the clicks per year & then charge the depreciation. Lets say in 1 FY the maximum clicks will be 1L & cost of camera is 50,000 then depreciation = 50000/500000*100000 = 10,000.
Lets say we estimated for 5 years & clicks completed in the 3rd years, then balance WDV should be depreciated in the 3rd year itself.
But note this method of depreciation will not be applicable for calculation of depreciation as per income tax. Income depreciation should be as per the rates mentioned in the schedule, lets say rate is 15% then you can claim maximum depreciation of 15% in each FY, if the assets is of no use on 3rd years then the balance WDV will be booked as full depreciation.
Lets say we estimated for 5 years & clicks completed in the 3rd years, then balance WDV should be depreciated in the 3rd year itself.
But note this method of depreciation will not be applicable for calculation of depreciation as per income tax. Income depreciation should be as per the rates mentioned in the schedule, lets say rate is 15% then you can claim maximum depreciation of 15% in each FY, if the assets is of no use on 3rd years then the balance WDV will be booked as full depreciation.
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01 July 2011
Can the balance WDV be claimed as full depreciation in the 3rd year in this case?
01 July 2011
yes, you can claim this.
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