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santhosh

santhosh (Querist)
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01 August 2010 please explain briefly what is meant by pro-rata depreciation with example

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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01 August 2010 Note no. 4 in Schedule XIV to the Companies Act, 1956, prescribes that “where, during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed”. The Committee is of the view that a company may group additions and disposals in appropriate time period(s), e.g., 15 days, a month, a quarter etc, for the purpose of charging pro rata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the amounts involved.

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