Depreciation

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sourabh rungta

sourabh rungta (Querist)
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21 May 2012 Can a Co. stop charging depreciation if it had stopped manufacturing & is a loss earning co.?

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
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22 May 2012 Yes, only if satisfies the crteron of AS 10

14.2 Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value and are shown separately in the financial statements. Any expected loss is recognised immediately in the profit and loss statement.

Ashok Mehta

Ashok Mehta (Expert)
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23 May 2012 if the query is with reference to income tax, then the depreciation has to be charged as long as the asset is kept ready for use regardless of it being actually used.
secondly, depreciation has nothing to do with profitability or otherwise of the company. it has to be charged even if company has incurred loss. if it is not charged and the return is filed accordingly, then AO calculates depreciation and loss thereafter.

Soumitra Basu

Soumitra Basu (Expert)
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27 May 2012 Depreciation is for effux of time. Company should provide depreciation in accordance with the circular issued by the Registrar of Companies.

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