Pushpak Lal (Student CA Final ) (286 Points)
31 May 2016
CA Rohit Jain
(Practice)
(1865 Points)
Replied 31 May 2016
Requites
- obtain last year's financials.
- obtain last year's depreciation schedule.
- obtain last year's fixed asset register.
- Take a rate of depreciation chart.
- Read As- 10 and As- 6
- Understand their system of accounting depreciation, whether it is automated or manual.
- Special care should be given to correct classification of the assets.
- Attention should be paid to the date on which asset is ready to use and put to use in case of new assets.
- transfer from CWIP to assets account should be monitored closely.
- Repairs and maintenance accounts should also be scrutinised.
- Asset which are deleted and assets will are about to be disposed should be properly dealt with.
Procedure:
Take details of the opening gross block and net block.
Take details of the additions and deletions made during the year
Calculate whole year depreciation for opening block except for the items which are deleted during the year.
calculate depreciation on the additions from the date they were ready to use.
Do simple arithmetic calculation in excel sheet to get net block at the end of the year.
Following equation may also help you.
opening block+ addition - dep on opening block - dep on additions -deletions- dep on deletions = net block
CAclubindia
