Depreciation Rate

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alpesh (Querist)
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01 January 2010 Hello
How Company Decide to Charge Dep. method i.e. straight line or W.D.V. & reason for selection method.? which is best method?

M Prabhakar Menon

M Prabhakar Menon (Expert)
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01 January 2010 Depreciation method is an accounting policy of the company which is consistently applied every year. The Companies Act allows 2 methods, which ever method is applied it has to be disclosed in the Schedule of Accounting Policies attached to the Annual Accounts any change in method has to be reported seperately. The Income Tax Act follows the written down value method and the rates and grouping are different from those in the Companies Act 1956.

CA.ViVeK M ACA

CA.ViVeK M ACA (Expert)
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01 January 2010 Companies Act follows SLM method of depreciation and the Tax laws follows WDV method.

In Wdv method the depreciation for the initial year is high and lower in the later year....

In SLM it is constant over the period

If the company adopt SLM, then, provision should be taken for Defered tax.

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