Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Depreciation For Building work in progress

RAMESH BABU (ACCOUNTS MANAGER) (37 Points)

24 July 2010

Please let me know the Depreciation Rate for Building work in Progress. And, confirm me that, Is there is Depreciation for Building work in progress.

Reply
Follow
Share

13 Replies

CA. Nishant Jain (Audit Executive) (411 Points)
Replied 25 July 2010

Dear Ramesh Babu,

As per Accounting Standard 6, Depriciation Accounting Para 3.1..........

Depriciation is a measure of the wearing out, consumption or other loss of value of a depriciable asset arising from use, effluxion of time or obsolescence through technology or market changes.

In your case since the building is under construction, it will be shown under the head Fixed Assets as Capital Work in Progress but no depriciation will be charged.

2 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Prasad P (Chartered Accountant) (117 Points)
Replied 27 July 2010

No need of any depreciation till the asset is ready to use. Here the entire asset is in WIP stage. so No question of depreciation. If it is partly compleated and is ready to use without the aid of the remaining uncompleated portion then that compleated portion only is elegible for depreciation.

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 27 July 2010

FULLY AGREED WITH FRIEND'S VIEWS....

Mayank (Sr.Accountant) (152 Points)
Replied 31 July 2010

Hii.

As per AS-6 ,There is no need for depreciation because depreciation is to be calculated when asset is in use.

In your case the building is under construction so depreciation will not be charged. & when the construction will be completed it will be calculated from the date when the building will be ready to put to use.

bye

CA. BIJENDER KR. BANSAL (ACA, B.COM) (8148 Points)
Replied 02 August 2010

AGREED WITH EXPERTS.

DEPRECATION IS PROVIDED ON THAT ASSET WHICH IS FULLY COMPLETED AND PUT TO USE.

NO DEPRECAITON ON WORK IN PROGESS WILL BE PROVIDED.

Upgrade to CAclubindia Pro. Subscribe Now!

Nilesh K (CA) (39 Points)
Replied 04 August 2010

What would be the Experts stand in a situation where a Building Project has been accounted as capital work in progress, but for many years the Project remains incomplete for various reasons of legal complications, funds inavailability, etc. The erected structure has in effect meanwhile been subjected to deterioration.

Can the company claim depreciation in this situation?.

Also, what if (in the same situation above) the capital work in progress account has not been classified into various heads such as - elevator, central air-conditioning, fittings & fixtures etc. Even these appliances and fittings have undergone wear and tear over the years, some perhaps even rendered useless or obsolete. What should be the auditor's and accountants stand in such a situation as far as correct accounting treatment is concerned and also with regards to the experts view for claim of depreciation under income tax. Ironically, all these expenses have neither got charged to P&L A/c nor have they been accounted for any annual depreciation allowance.

Maulesh Bhatt (Accountant) (21 Points)
Replied 12 February 2012

Please let me know the Depreciation Rate for Building under Construcation, Building contractor give the construction deed so please tell me what is depreciation rate for the building Construcation & i have claim for deprecation fo under construcation building.

Thank in adavnce

RANA PANKAJ KUMAR (Freelancer) (37 Points)
Replied 26 November 2012

https://www.onlinejobsfree.com/?id=1150852 click on the above and register earn money and help me too to earn it's 100% free and genuine .... u can check and see urself

Dhaval (Chartered Accountant) (56 Points)
Replied 03 March 2014

Plz let me know what if building is 9o% completed on 28/2/12 and started to use it but other 10% work is completed after 3 months on 25/5/12. Can I charge depreciation on 31/3/12 on building?

shishir (pc) (22 Points)
Replied 10 September 2014

Recently i have read all above suggestion. please provide suggestion for this situation

Construction of Building completed on 30-09-2013 (From here capital WIP is transferred to Building A/c).From that date Building is Ready to use but till the F.Y. ended Building is not in Put to use. So whether Depreciation Should be charge from 01-10-2013 or not.

Upgrade to CAclubindia Pro. Subscribe Now!

dhawalguitar (student) (98 Points)
Replied 17 June 2015

ir, how to calculate Building improvements of capital nature that materially extend the useful life of a building or increase the value of a building, or both as per the Schedule II of Companies Act 2013.

Please provide an illustration if possible.

dhawalguitar (student) (98 Points)
Replied 17 June 2015

Sir, how to calculate Building improvements of capital nature that materially extend the useful life of a building or increase the value of a building, or both as per the Schedule II of Companies Act 2013.

Please provide an illustration if possible.