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Depreciation query

30 May 2011

Is there any fault (under statutory report) if, any company aply depreciation rates lower than rates given under companies act?

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6 Replies

valji (Accounts manager-MBA) (2150 Points)
Replied 30 May 2011

you have to follow comapy act for rate ,for method you may choice WDV or streight line as per your choice but once method is choice you have to regurly follow same system(consistency)

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Mohammed Dalal (Chartered Accountant) (163 Points)
Replied 30 May 2011

Companies have to apply the rates mention under sch IV of companies act.However if the same are below the rates mentioned in Sch IV the fact should be mention in Notes to Accounts and the auditor will have to mentioned the Same in his/her Audit report and will also have to quantify the effect of the same on profits

Rakesh Jain (Businessman) (456 Points)
Replied 30 May 2011

Dear Sabhya,

A company can charge a Different Dep. rate than the rate specified in the company act. If the company has charged a different Dep. rate than a DISCLOSURE, showing Dep. rate charged or the useful life taken othe than specified in the company act, should be made in the financial report.

The company should have proper working to prove the same differance.

In your case the company can charge a lower rate of dep. but it have to satisfied the above condition and should make a proper DISCLOSURE.

With Regards,