Depreciation as per Companies Act,1956

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CA Dron Bharadwaj (Querist)

07 January 2010 Can a asset whose WDV at the beginning of the year is less than 5000 be depreciated at the rate of 100% ?

if yes,
plz give the legal base of the answer.
thanks in advance.

Manish V. Khatri

Manish V. Khatri (Expert)

07 January 2010 If newly assets purchased and whose value is less than 5000 that assets is eligble for 100% deduction for the same you can refer SCHEDULE XIV - RATES OF DEPRECIATION
of the Companies Act, 1961 depreciation on assets, whose actual cost does not exceed Rs. 5,000 shall be provided depreciation @ 100%.

Assets who has WDV at the beginnig of the year is less than 5000 will not liable for 100% deduction even in Companies Act, 1956 and under Income-tax Act, 1961

CA Dron Bharadwaj

CA Dron Bharadwaj (Querist)

07 January 2010 "Can a asset whose WDV at the beginning of the year is less than 5000 be depreciated at the rate of 100% ?"

can a company do the same if they have incorporated this rule in their accounting policy ?

Manish V. Khatri

Manish V. Khatri (Expert)

07 January 2010 The above rule is appliable to newly assets purchased not in WDV of assets.
WDV means after Depreciation value of assets. Even though assets WDV after depreciation goes below Rs.5,000 then in that case it is not allowed to 100% Depreciation. However you can Impair the assets subject to the AS-28 "Impairment of Assets"

Yes, Company can charge 100% Depreciation on assets (i.e. newly purchased assets which value's is less than Rs.5,000.00) without incorporating the rule.

CA Dron Bharadwaj

CA Dron Bharadwaj (Querist)

04 February 2010 thanks

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