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Depreciation calculation help required

CS Arjun Rajagopal (B.com, ACS) (1056 Points)

13 June 2016

Dear CCI Members,

Please help me to calcualte depreciation as per Schedule II of the Companies Act, 2013 from the following info:-

Asset Purchased : Xerox Machine

Date of Purchase : 30.05.2015.

Cost of Machine : Rs. 52,000/-

Step by Step calculation is highly appreciated.

Thanks & Regards,

Arjun Rajagopal

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7 Replies

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 13 June 2016

Depriciation will be available @ 15% on Rs.52,000 i.e Rs.7,800 for F.Y 2015-16.

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CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 13 June 2016

Thank You Harshal for your reply.

But as per Schedule II of Companies Act, 2013 depreciation is to be calculated on the basis of useful life of the asset unlike the old 1956 Act where depreciation % was mentioned.

Therefore I have calculated depreciation as follows:-

Xerox Copier comes under office equipment -

Useful life - 5 years

Depreciation - 52000/5 = Rs. 10,400/-

But Iam not sure whether this is the correct way to calculate depreciation. Waiting for learned members view.

Regards,

Arjun Rajagopal

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 13 June 2016

Dear Mr Arjun, the calculation shown by you is correct as per Schedule II of companies act,2013. My previous reply was as per the Income tax act,1961. Thanks

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Saliq Ansari (CA_Final Student) (885 Points)
Replied 13 June 2016

The Calculation is corret for SLM but you ignored Scrap Value 5% after considering the scrap value the yearly depreciation as per SLM shall be Rs. 9880/- ( 52000*.95 / 5).

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CS Arjun Rajagopal (B.com, ACS) (1056 Points)
Replied 13 June 2016

Thank you Saliq. Wht abt 2nd year?

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CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 13 June 2016

Depreciable amount is the cost of an asset, or other amount substituted for cost, less
its residual value. Ordinarily, the residual value of an asset is often insignificant but it should
generally be not more than 5% of the original cost of the asset.
Taking residual value will depend on management's estimate. It is not necessary to take residual value. However, wherever taken,it should not be more than 5%of original cost of asset unless management's estimate justifies higher residual value.