100% write off

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2011 If purchasing cost of a asset is
further, in next month, if we purchase also same asset costing
Please suggest me.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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07 December 2011 Question is not clear. Please redraft your query clearly, again.

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2011 If a co. purchase a asset below Rs.5000 in a month and it does 100% write off this asset in P&L.
further in next month if company again purchase the same asset below Rs.5000. then what will be happened?

please suggest me.

Querist : Anonymous

Querist : Anonymous (Querist)

07 December 2011 if a co. purchase a asset below Rs.5000 in a month and it does 100% write off this asset in P&L.

further in next month if company again purchase the same asset below Rs.5000. then what will be happened?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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07 December 2011 Please refer Schedule XIV of the Companies Act, 1956.

Notwithstanding anything mentioned in this Schedule depreciation on assets, whose actual cost does not exceed five thousand rupees, shall be provided depreciation at the rate of hundred per cent:

Provided that where the aggregate actual cost of individual items of plant & machinery costing Rs. 5,000 or less constitutes more than 10 per cent of the total actual cost of plant & machinery, rates of depreciation applicable to such items shall be the rates as specified in Item II of the Schedule.

So you can not directly charge the assets below Rs 5000/- to P/L Account. You need to capitalize it and then provide 100% Depreciation. Also it is applicable for Plant and Machinery items only and not all assets. Further also check if the assets consists of more than 10% of the total actual cost of Plant and Machinery.

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