Rachit
(CA Job)
(22 Points)
Replied 30 June 2015
| Originally posted by : karthiga | ||
 |
original cost of asset 10000.. depreciation for 9 yrs 9500.. therefore residual value 500.. here dep for balance 1 yr can be claimed in wich value? |  |
HI Karthiga,
No Depreciation will be charged in the 10th Year as the Asset has already reached its residual Value.The residual Value of the asset as per schedule II of companies act is 5% of the cost of asset which is Rs 500(5% of Rs 10000).And as The asset has already reached its Residual Value there will be no depreciation.
Note: The company can assume residual value of less than Rs 500.However it must provide proper justification for Valuing it below residual value specified in the act.
Hope it Helps...
RRJ
(Student CA Final )
(57 Points)
Replied 01 July 2015
IF RESIDUAL VALUE IS TAKEN AT 1% OF COST THAN FURTHER DEPRECIATION WILL BE PROVIDED FOR LAST YEAR.
ANAND S
(student)
(162 Points)
Replied 01 July 2015
what is the treatment for Rs 500 (residual value) portion. how long it should be kept in books or how to close it. and upto last year we have not having residual value so shall we continue to depreciate for full value of asset or it is mandatory to have 5%
RRJ
(Student CA Final )
(57 Points)
Replied 01 July 2015
continuation of depreciation depends upon useful life of assets....1). if useful life of assets has ended and its wdv is less than the residual value than the assets should be carried at that wdv in the books......2). if useful life of assets has ended and wdv is greater than residual value than WDV- minus Residual value (WDV-RV) is transferred to Reserve.
its not mandatory to have RV as 5% u can take lower upto 1%.
ANAND S
(student)
(162 Points)
Replied 01 July 2015
but if lower residual value taken disclsure need right and i need to know the accounting treatement for 5% residual value if i keep 5% how long i need to show in my books
Rachit
(CA Job)
(22 Points)
Replied 03 July 2015
I would Agree with RRJ.Residual VAlue can be taken lower than 5% however proper justification needs to be given in such case.
The Residual VAlue of the asset (1% or 5% as the case may be) Will be kept as the value of asset untill the asset is sold.
GST Live Certification Course (39th Batch) - April 2024 (Weekend Batch) (With Certificate)
"Live class on Python for Financial Analysis: Unlocking Efficiency in Accounting and Finance"
CAclubindia
