Depn an Assets costing less than Rs 5000 each

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K V Subba Rao (Querist)
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14 July 2011 As per Notes appended to the Rates of Depreciation under the Companies Act as mentioned in Schedule XIV---

“4. Where, during any financial year, any addition has been made to any asset… the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition…”.

“8…depreciation on assets, whose actual cost does not exceed five thousand rupees, shall be provided at the rate of hundred per cent”

Please advise whether, in case of buying a Cell Phone costing Rs 3000 in Jan, we should charge off in Accounts towards Depreciation in the year of acquisition

(a) Rs 3000 (entire cost being less than Rs 5000) as per Note 8; or

(b) Rs 756 (3000x100/100x91/365) only as per Note 4

If we charge off Rs 756 only in the year of acquisition and carry forward the balance to next year and go on calculating Depreciation at normal rate, it will lead to finding petty amounts in Assets Register

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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14 July 2011 You can charge of 100% depreciation for Mobile purchase for Rs.3000, it will be covered

8…depreciation on assets, whose actual cost does not exceed five thousand rupees, shall be provided at the rate of hundred per cent”

even purchase in between the years also

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