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depr

manisha (part time teaching and in practice) (210 Points)

16 June 2009

shud we charged depriciation on a flat which is not used by co. bt it is in co. name....

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7 Replies

renuka kadge (CA Final Student) (148 Points)
Replied 16 June 2009

ya the company should charge depreciation on the flat at the rate of 5%.since the 4 condition for claiming depreciation is satified

1.flat is owed by the co.

2.it is used by the co. (even if it is passive use)

3.it should be used during the relevant py

4.Depreciation on tangible Asset

Regards

Renuka .kadge

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CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 17 June 2009

Depreciation to be charged or not depends on the nature of asset. If this is purchased to be used for the business than depreciation will be charged. If there is no intention to be used for the business than no dep. is required to be charged than it will be shown as investment not as assets.

CA Devanshi Gandhi (Ajani) (FCA DISA Mcom CIFRS & LLB) (9058 Points)
Replied 23 June 2009

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 24 June 2009

Your Q has two Possibilities :

1. If the asset is not used by the co. and not by anyone else even, than depr. is not to be charged at all.

2. If the asset is not used by the co. but by anyone else on the name of co., then depr. is definately to be charged.

So, here imp. point is that if flat is used than at whose name it is used and not at whose name it is owned.

(Guest)

It can also be a case of Lease agreement were the building is in the name of the company but it is used by the lessee.

The copmany is not using it. But the company can claim depreciation if it is an Operating Lease(AS 19)

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MAYANK GUGLANI (CA ) (124 Points)
Replied 26 June 2009

yes the depreciation should be charged.

the reasons are given below.

1. the owner is the company

2 the company is in possession of the flat

3 and depreciation is charged as per wear & tear and efflux of time

4 so it does not matter that comapy is using it or not

5 depreciation is charged as per efflux of time

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 26 June 2009

Yes as i earlier stated.. if the asset is used by anyone else, i.e on lease basis, then deprn is to b charged by co. only (as clarification given by priyadarshini).... othervise in finance lease, it shd b charged by user n not co.