Depreciation

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Heman Chheda (Querist)
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20 January 2010 There 200 chairs purchased for Rs.500 each.on 1/10/2009. What would be the Depreciation for the December Quarter? As per Cos Act an asset amounting less than 5000/- should be charged with 100% Depreciation. Will the chairs qualify for
100% Depreciation? What will be amount of Depreciation?

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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20 January 2010 Dear Heman,

You raised this question previously (today itself) but could not be satisfied; unfortunately.

Just ask yourself whether by PURCHASING 200 CHAIRS have you purchased "200 ASSETS" during the year ?

We should also look into the intention of the Act. According to the Companies Act; we have to compulsorily maintain fixed assets register. OK !

If small amount assets are maintained in this register; it would be unnecessarily lenghty because the amount is not material specially in the case of Companies.

But if you write off all the chairs in one year; the physical verification of the asset in the coming years would not be possible (because of not appearing in the Fixed Asset Register) and uncontrollable for management also.

Fixed Register is maintained to verify the assets in coming years. Since this fixed asset register is not mainained in the financial accounting system hence the Companies Act has incorporated such provisions.

You have not purchased one chair but 200 chairs.

So now ask yourself (not me) still 100% depreciation is advisable ?

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