write off of asset

This query is : Resolved

PNIMESH (Querist)
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01 June 2010 Urgent !!!

Asset whose value is below Rs.5000 can be write off during the year and whether it is allowable as per Income tax act and companies act?

Can block of asset below rs.5000 can be written off?

Guest

Guest (Expert)

01 June 2010 WDV whose value is less than or equal to 5000 cannot be charged off fully unless it is impaired or disposed off.

As per Sc. XIV of the Companies Act, assets whose actual cost does not exceed Rs. 5000 has to be depreciated @ 100%. So, it is the gross block of the asset, not the WDV figure. So, if the WDV at the beginning of the year falls below Rs. 5000 then also, it has to be provided at a minimum of the rate prescribed in Sch. XIV, not fully.

Make an accounting policy and disclose in the notes to the preparation of the financial statements that any depreciable asset less than Rs 5000 will be written off.

There is no compultion but in general practise it applies.

Conclusion: You can W/off d such assets.