Depreciation

As per question, I think it will calculated as follows:

Interest for the period 01.08.2010 to 31.10.2010 shall be capitalized & added to the cost of the asset purchased

Interest from 01.11.2010 shall be claimed as revenue expenditure

Calculation as follows:

Opening WDV                         Rs.75,00,000

Cost of asset purchased     Rs.10,00,000

Interest capitalized                Rs.25,000 (10,00,000 x 10% x 3/12)

Total                                         Rs.85,25,000  

Normal Depreciation            Rs.12,01,875 [(10,25,000 x 7.5%) + (75,00,000 x 15%)]

Additional Depreciation        Rs.1,02,500 (10,25,000 x 10%)

Closing WDV                          Rs.72,20,625

Note: Depreciation shall be restricted to 50% since asset is put to use for less than 180 days.

Hi Rohit,

Pl explain why you have taken additional depreication of 10% on new p&M.

Thnx,

Girish

Hi Girish...Its not Rohit, its Rachit...

I think benefit of additional depreciation is available on purchase of new plant and machinery @ 20% and if it is used for less than 180 days, it shall be restricted to 50%..

Hi Rachit,

oh.. My Apology for mis-typing your name.

Regd Addl. Dep : is this section 32(1)(iia) which you have mentioned ..? if so for that some conditions to be satisfied if I m not wrong. But I just want to know can we presume like wht you have done in the above calculations..in our exams?

Thanks,

Girish

Hi. Girish...Ya u can assume that all the conditions are satisfied, if no additional information is given in question...

Thanks! Rachit & All the Best!

Thanks Girish...Same to u...:)