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rate of dep as per law or estimate?

abhishek bhatt (CA student) (136 Points)

31 December 2008

what co. must follow if rates are diff as per co's act and based on proper estimate.eg. co's act says 15% dep to b provided for certain fixed asset and estimate says utiliastion will be more and so to charge @ 20%.what to follow?whether rates of schedule mentioned as per law are mini ?

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6 Replies

R.Suresh (Sr. Executive) (394 Points)
Replied 31 December 2008

You can follow with law that is best for accounting purpose

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CA Jithesh C (Chartered Accountant) (253 Points)
Replied 31 December 2008

I think according to AS 6, you can follow 20%. A rate which is lesser than the rate in Companies Act is not passible to follow.

Disclosures are required.

Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 31 December 2008

The rates of depreciation prescribed in Schedule XIV are the minimum rates. No company can charge depreciation at a rate lower than prescribed in the schedule. If, based on technical estimate, higher rate is justifiable, the Company can apply such higher rates for the purposes of computing depreciation under Companies Act.

aasita (ACA) (387 Points)
Replied 01 January 2009

mr. Pavan is absolutaly right

Shubhankar Limaye (B.Com.) (174 Points)
Replied 06 January 2009

As regards the company, Before payment of dividend when profit is required to be calculated as complient with Section 205, one has to adopt Schedule XIV Rates are to be adopted.

A company may depreciate asset at lower rates not without disclosure of these material departure from Accounting Standard 6, which is again debatable.

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CA HARISH (Chartered Accountant) (57 Points)
Replied 03 August 2009

Originally posted by :Pavan Jain S
"	The rates of depreciation prescribed in Schedule XIV are the minimum rates. No company can charge depreciation at a rate lower than prescribed in the schedule. If, based on technical estimate, higher rate is justifiable, the Company can apply such higher rates for the purposes of computing depreciation under Companies Act.	"

In the case of a private company sec.355 provides that schedule XIV rates are not mandatory... In such case,can rates less than those specified in Sch XIV be applied???