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Depreciation calculation

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)

30 December 2014

Friends/Seniors

This has reference to computation of depreciation on fixed assets for the year ending 31st March 2015. Now depreciation is governed by Schedule II to Companies Act 2013. It is provided therein the useful life of a desktop is 3 years. So, if the WDV of a desktop is Rs 30,000/- as on 1st April 2014 will the depreciation on that asset for current year be Rs 10,000/-. Will the depreciation provided on this desktop in earlier years have to be recomputed. Is the date of purchase of asset relevant in this case.

Regards,

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17 Replies

venugopal (analyst) (44 Points)
Replied 30 December 2014

As per Companies Act 2013, the below steps may be followed to computate the depreciation for the assets acquired and put to use prior March 31 2014.

1) Determine the maximum useful lives of the asset as per Part C of schedule II of Companies Act 2013.

2) Determine the remaining useful life as on 31st March 2014. ( Remaining useful life= Maximum useful life - Lapsed life upto 31-03-2014)

3) Determine the respective residual values( Maximum 5% of the original cost)

4) Determine the remaining depreciable amount. (Opening WDV-residual value)

5(a) Remaining depreciable amount is more than zero with no remaining useful life----- Remaining depreciable amount will be adjusted with the opening balance of Retained earnings.

5(b) Remaining depreciable amount is more than zero with some remaining useful life-----Remaining depreciable amount will be systematically provided over the remaining useful life.

Hope this will be helpfull.

Thanks

Venugopal

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Dayanand Keny (Service) (22 Points)
Replied 31 December 2014

In case the rate of Depreciation (under WDV) is to be worked out considering the no . of days (asset if acquired in the middle of the year) then how should it be worked out?

vishal (b) (46 Points)
Replied 31 December 2014

How the useful life is to b calculated if part C of schedule II is not followed...!! ??

Surajit Das (Article Trainee) (152 Points)
Replied 31 December 2014

Schedule-ii has been provided the useful life of assets.The useful life can be consider other than the useful life given in respect of particular asset in the schedule-ii of companies act 2013. But in this case you have to give sufficient reason in respect of consideration of other useful life. The reason should be backing with some technical support like engineers certificate etc.

vishal (b) (46 Points)
Replied 31 December 2014

How the useful life is to b considered..?!!?

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Nikhil Raj (Self) (91 Points)
Replied 31 December 2014

Dear Friends

PFA

Regards

nikhil

Attached File : 772204 1393348 1 format of deprciation schedule as per co act 2013.xlsx downloaded: 1272 times

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 31 December 2014

Nikihil,

The excel file uploaded by you is password protected. Would you like to provide us the same so that we can read the contents therein.

Regards,

Nikhil Raj (Self) (91 Points)
Replied 31 December 2014

Okz,its only for your ref:,

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 31 December 2014

Friends

Thanks for your responses. Let us take an example. I purchased a desktop for Rs 42,000 on 01/01/13. Depreciation provided @ 40% for FY 2012-13 is 4,200. WDV on 31/03/13 = 37,800. Depreciation for FY 2013-14 = 15,120 leading to a WDV at 22,680.

So,how would the depreciation be calculated for FY 2014-15 with/without effects on opening retained earnings.

Regards,