As per companies Act 2013 , it is said that we have deduct the residual value from the carrying cost and adjust the remaining balance with the retained earnings as on the opening date(i.e 1.04.2014)(if the asset has been already used more than new estimated life of PARTC Schedule 2) . Hence my question is how do we account for the residual value of the asset in books, when the book value of such assets have been reduced to NIL.
20 April 2015
Sir, thankyou for your answer. But i would like to actually ask that in the first link example the residual value rs.500 (how will it be shown in books)?? i mean the adjustment part with opening balances and all is clear. But how do we show the residual value in the books of the company ??
Actual Cost Rs 10000 Accumulated Depreciation Rs 9500 Residual Value Rs 500
So till the asset is discarded the Gross Block will include Rs 10000 and Accumulated Depreciation will include Rs 9500 therefore Residual Value of Rs 500 (10000-9500) will remain in books. Hope it is clear now.
20 April 2015
Also check out Application Guide on the provisions of Schedule II to the Companies Act 2013 by Corporate Laws & Corporate Governance Committee of ICAI from link given below:
CAclubindia
