26 June 2010
There is a change in method of Depreciation i.e. from Income Tax Act to Companies Act, which may result some deviation either deficiency or surplus. I want to know that what will be the treatment in P/L Acoount. Please confirm me whether the depreciation adjustment will be above the line or below the line.
26 June 2010
Depreciation is calculated under two Acts differently with different rates and for their respective purpose.
Deduction of depreciation calculated according to income tax act would be allowed while calculating income from business and profession for computation of tax.
Deduction of Depreciation calculated according to companies act would be allowed while preparing financial statement of the company.
There is no need to adjust the depreciation amount in profit and loss account either below or above the line.
For entities other than companies, the entity need not to maintain the two depreciation schedule firstly according to income tax act and other one according to companies act as the companies act is not applicable on these entities.
15 March 2011
sorry to say but what you are saying is not possible ,while you finalise the balance sheet of the company depreciation will be calculated as per companies act and for income tax purpose it will be computed through income tax method.
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