Note 7 of Schedule II of Companies Act 2013 specified that:
“From the date this Schedule comes into effect, the carrying amount of the asset as on that date, shall be depreciated over the remaining useful life of the asset as per this schedule”.
A plain reading of this will imply that the Depreciation working for F.Y.2014-15 will be as follows:
Rs.

(1) Cost of Asset (Original) 100000
(2) Method adopted upto 31/03/2014 WDV
(3)Rate adopted upto 31/03/2014 10%
(4) W.D.V on 01/04/2014 65610
(5) UsefulLife As per new Schedule II 8 Years
(6) Remaining useful Life 4 Years
(Since Rs. 34390/- has been w/off over past 4 years)
(7) Depreciation for 2014-15,2015-16 65610/4
2016-17 & 2017-18 16403

(Residual Value assumed: NIL)
However, if AS-6 is to be followed, we will have to work out Depreciation by 3 Methods for 2014-15:

Rs
(A) As per above 16403
(B) By giving Retrospective effect to useful life of 8 years (Rs.12500/- for 2014-15 &Rs. 15610/- for earlier 4 years.) 28110
(C) By continuing the WDV method followed upto 31/03/2014 just for disclosing change in method & effect thereof. 6561

In my view, workings out A & C are proper & difference of Rs. 9842/- to be disclosed by way of a Note saying “profit is stated at a lower figure by Rs. 9842/- due to change in Method of Depreciation.”
It may view correct? If not what is the correct Method of
(a) Charge to P & L A/c in 2014-15.
(b) Note to Accounts?


(1) An expert practicing in Pune has stated that you do not have to change Method of Depreciation from existing WDV (upto 31/03/2014) to SLM. But you have to work out a new Rate of Depreciation for continuing WDV Method which will enable you to write off the WDV of 01/04/2014 over remaining useful life.
In the illustration given earlier, the new rate will be nearly 53%.
Does not this sound illogical?

(2) One more view is that the WDV of 01/04/2014 will be reworked following SLM Method from the beginning. So, if the book WDV is more than Re-worked WDV, difference will be debited to P & L A/c.
Please opine which Method should be adopted.

Please let me have your opinion.

Thanks & regards.

R.V.Marathe
Chartered Accountant

A does the business of organising study trips for various foreign universities who send their students for study trips in India.

The payment of project typically consists a certain % as payment professional service charges and reimbursement of expenses on actual basis incurred by A which includes tavelling/lodging boarding/site visits of the students during the study trip in India and educational seminars etc.Funds are released by clients in advance or partly advance and partly in the course of program.

While there is no issue in accounting of the serevice charges received by A which is booked under his professional/consultancy income. But how to show the expenses in tally(under which group) which are incurred by A and ultimately reimbursable by client. In short, can we we route these expenses and payment received against them through P&L a/c of A since they are not his business expenses. Or we have to show them as a current a/c of the client like we open an account for a particular project in Debtor group in which credit all the receipts and debit all the expenses. But there many such clients.

Can anyone CA friend please guide and also let me know if there is any accounting standard of ICAI to deal with this types of accounting.

Thanks & Regards

P.C. Joshi

how i calculate forex gain or loss on 31 march as per AS 11 when more than one time goods sold to party and payment recieve.

also tell about if advance received against sell loss\proit required to calculate or not

please help

Dear experts,

Please clarify a few of my concerns on IRR.

I know IRR is the discount rate that generates a zero net present value for a series of future cash flows. I read somewhere that IRR for an investment is the percentage rate earned on each Re invested for each period it is invested.

I want to konw the reason behind discounting the future cash flows.What purpose does it serve? At IRR NPV is 0 so doesnt it imply that there is neither profit nor loss

If IRR is 15% does it mean the company is earning 15% after recovering the cost of the project (initial outflow). Also, suppose the IRR for a project is 15% (for 5 years) does it mean that 15% return will be earned by the company over a period of 5 years or in each of the 5 years individually?

An early reply would be appreciated.

Thanks

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as per schedule XIV we have already passed the entries for depreciation . but now as per schedule II we have recalculate the depreciation.then i have doubt here. if the depreciation was 90000 as per old act, and as per new act depreciation was 60000. then how should should we adjust the excess 30000 depreciation now??