I have just join a manufacturing company in Ethiopia. Here I looked last year's balance sheet which ended on 31-12-11.
I the Annexures of Calculation of Fixed Assets after deducting Depreciation, the Auditor's mentioned as following:
"FA are stated at cost less accumulated depreciation> Except for the Depreciation of building which is calculated on straight line method; Depreciation of all other assets is charged as per a % of net book value at the following rates per annum:
10 May 2012
Thanks Mr. Ajay Singh for such a "nice" query. . I am also waiting for a "healthy" reply for a "lengthy" query. . Right now; I can provide you only "working notes" : . For each asset; the depreciation is calculated on the basis of number of days it was used for the business during the year as per applicable depreciation rate. . Please "type" all such calculations to make the "checking" possible. .
As per FA policy described by you it tell two things:
1) Building to by depreciated on SLM basis @ 5% i.e. you have to compute depreciation on Gross purchase value of building which is 2747815 x 5% = 137391
2) For other assets you have to follow WDV method i.e. to calculate depreciation on Net Value. In the case of Motor Vehicle it will be: Gross Value 2413230 Less: Acc Depreciation -675659 Net Value 1737571
Depreciation = 1737571 x 20% = 347514
Note:
1) For the opening balances calculate depreciation for full year (365 days)
2) For new additions (new assets), you have to calculate depreciation by applying rate to the Gross Value or net value as the case may, subject to number of days for which new asset has been put to use.
CAclubindia
