Hi All Respected Members,
Please educate me if any business did not charged depreciation on their Assets in previous 2 or 3 years (due to have less competency) and now they wanted to record or depreciate it, what will be the best procedure to record it ?
Do they have to calculate each year depreciation (including current year depreciation) as per scheduled rate and then reduce it from current Assets value
or
they can't take precious depreciation and they have to only calculate and reduce current fiscal year depreciation from their Assets ?
Thanksin advance for your precious time and efforts to reply this query.
Just check in shedule II that , If you not depreciated an Asset , then can you transfer depreciation to Accumulated Depreciation , if yes then you should have pass the following entries.
1st year
Depreciation A/c Dr
To Accumulated Depreciation A/c Cr
( Transfer to Accumulated Depreciation A/c )
2 nd year
Depreciation A/c Dr
To Accumulated Depreciation A/c Cr
( transfer entry)
3 rd year when you charged depreciation
Accumulated Depreciation A/c Dr
Depreciation A/c Dr
To Asset. A/c Cr
( Accumulated Depreciation & Depreciation charged)
But above entries if it is as per schedule II of the companies Act , you should have pass above entries in the past year.
When Asset was purchase ? what is an Asset ? , Have you taken input tax credit ? As per section 16(3) of the CGST Act ,you can not claim Depreciation on tax Component if you have taken ITC , so you have to consider all these things .
Take more Opinion on this
CAclubindia
