Depreciation on Fixed Assets Purchased

This query is : Resolved

Guest

Guest (Querist)

12 June 2008 We have purchase a capital (wiz. computer, furniture etc.) in consessional rate.

Please advice what amount to be considered for calculating Depreciation (either co. act or IT Act)

for Example if we purchased a 2nd hand Car (WDV Rs. 250000/-) in Rs. 100000/-.
What will be the amount consider for Dep. As if we consider the WDV value and rest in Discount account it may caulse to increase profit.

Please Advise.

Thanks

Rajesh

Shyam Lal Naik

Shyam Lal Naik (Expert)
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12 June 2008 If you are a company, depn rate prescribed by Co. Act is applicable. If you are any other entity, you can take IT depn rate.

In the example given by you, Rs. 1 L is your WDV, depn has to be calculated on this amount. The cost incurred by you is relevant as opposed to WDV in the hand of the seller.

Guest

Guest (Querist)

14 June 2008 Thanks for reply

one more thing i want to add in this query that if we received a fixed assets as a gift (with out any payment)

Still dep. is not applicable or if applicable on which amount

Thanks

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PC-www.bharadwajinstitute.com

PC-www.bharadwajinstitute.com (Expert)
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19 June 2008 Depreciation is calculated on the "Cost of acquistion" in the first year then on reducing balance method

* Cost includes, handling, taxes and duties, installation, initial repairs, registration expenses and other incidental charges before the asset is being put to use

Then if the second hand asset is acquired....the seller's WDV is immaterial......only PRICE paid + Initial repair or remodeling expenses will be considered as a base for calculating depreciation

POR is a capital loss to be adjusted with Securities Premium account and if there is no balance in Securities premium account, it can be adjusted in P & L Balance.

with regards

PC
profvpp@gmail.com
www.bharadwajinstitute.com