Sorry...now Corrected
Transitional Provisions
From the date schedule-II comes into effect, the carrying amount of the asset as on that date:
- Shall be depreciated over the remaining useful life of the asset as per schedule-II
- After retaining the residual value, shall be recognized in the opening balance of retained earning where the remaining useful life of an asset is Nil.
For Example
A Company acquired a building at accost of Rs. 10 Crore. The Company was depreciating the building according to schedule XIV SLM rate i.e. 1.63%. Now In August 2013 Schedule-II was introduced via the companies Act 2013 in which the useful life specified is 30 year.
If the building is acquired on 01/04/2000
Depreciation charges till FY 2012-13, depreciation on SLM Basis for 13 year
Rs 10Crore X1.63%X13 Year=Rs.21190000/-
Carrying Value=10 crore-2.11 Crore=7.88Crore approx.
Now the carrying value as on 01 April 2013 will be depreciated over the remaining useful life of the asset as per schedule II of the companies Act 2013. The remaining useful life is 17 year (30-13)
So annual depreciation to be charged to the profit and loss account from FY 2013-14 would be Rs7.88 crore/17= Rs.46.35 Lakhs