08 September 2015
I have a query regarding depreciation as per co. Act. 2013.I am confused in retain earning adjustment . For example .. If asset useful life is nill . if asset opening value as on 01.04.2014 is 500 and its scrape value is 100. Then as per rule 500-100=400 is retain earning . and if asset still in use then I want to know what is the entry should b pass and what about scrap value . is scrape value mentioned in fixed asset chart ?
08 September 2015
Scrap value is domain of MANAGEMENT and/or VALUER. Rely on the same else use 5% of COST as the scrap value.
If the useful life of the asset is NIL, it will continue to appear in the fixed asset register at 100 in your case or 5% if the 5% option is opted for.
As on 01/04/2014, the WDV is 500. So in this case depreciate the asset by 400 in the year 2014-15.
Can you please explain your difficulty about RETAINED EARNING in this regard?
08 September 2015
asset is still in use and its life has finished. how can we charged dep on it. as its life has finished then 400 is should be transfer to retain earning .
09 September 2015
Facts of the case: 01. WDV as on 01/04/2014 is 500 02. Useful life is over 03. The asset is not sold/disposed of/ discarded as on 31/03/2015.
Please note that there are many companies in India, which are USING the assets (especially the heavy machinery like blasts, punches, CNC machines) even after the useful life is over. Vehicles are another good example. Useful life is 15 years for 2 wheelers. Many of us are still using the 2 wheelers which are more than 15 years old.
The point is sale of asset / discarding of asset / dispossing off asset may not tally with its useful life, in reality.
09 September 2015
May I have the honour to ask you a query?
Why are you so keen in routing the entry through RETAINED EARNINGs, be it now or after discardment? Any specific fascination for RETAINED earning?
Once the asset is sold / discarded / disposed off, profit or loss arising out of such sale is worked out and same is transferred to profit and loss account. Why are you referring RETAINED earnings?
09 September 2015
Actually i have attended two seminars related to depreciation. i have presentations copies also. i can mail you if you can give me your e-mail id. actually they gave two options to adjust difference of residual value and opening value as on 1.4.2014 whether difference can be debited to reserve & surplus or debited to p&l a/c or charged from retained earning.
09 September 2015
Thank you very much. Now I got the nexus. Thank you once again.
Please forward the same to amolshankar@gmail.com OR amol@vpraca.com
Without going into the details of the said ppt, let me tell you, you were quoting WRONG example and hence I was bit PUSHY in asking about RETAINED earning.
Companies Act 2013, depreciation schedule has led us to very interesting situations, no doubt about it. Yet another beautiful area is DEFERRED TAX asset/liability, as the case may be. Your views please.
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