Method of depreciation while calculating profit for dividend

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Saloni Dhawan (Querist)
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04 May 2014 Hello All
Please anyone can help me to understand the following Paragraph Under Companies Act, 2013 Regarding the method of Calculation of Depreciation for calculation of Profits for Dividend Declaration and Payment, with the help of a hypothetical example. It goes Like As follows:
"Depreciation shall be provided in respect of each item of depreciable asset, for such an amount as is arrived at by dividing 95% of the original cost thereof to the company by the specified period in respect of such asset."

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 May 2014 Dear Saloni,

this is the standard method of computing depreciation under companies act.

for eg: lets say cost of the asset is Rs 100. useful life is 10 years.

then depreciation (eg straight line method) shall be calculated as under:

100*95%/10= 9.5

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