Depreciation as per companies act, 2013

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Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2015 I am having few queries regrading calculation of depreciation as per companies act, 2013. Kindly help me with these problems.

1. Suppose an asset is purchased on 28.09.2012, then what will be the expired period as per new act?

2. If the date of purchase of asset is not traceable then how can we calculate its expired period?

3. If opening balance of Plant and Machinery contains machineris purchased on different dates then will I have to calculate WDV rate of depreciation for each such machinery?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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07 April 2015 1. The period of useful life has been notified as per Part "C" of Schedule II of The Companies Act 2013 for different classes of assets.
2. The date of purchase can be traced out from the fixed assets register maintained by the company.
3. Yes, this is a very tedious job but you will have to.

Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2015 Sir my query is not regarding useful life, I want to know whether the expired life of an asset purchased on 28.09.12 will be considered as 2 years (i.e counting P.Y 12-13 & 13-14 as complete 1 year) or will consider it as 1 and half year?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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07 April 2015 1 and half year shall be the expired life

Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2015 Sir if 1 and half year is the expired term and the total useful life is 8 years then how will rate of depreciation under WDV be calculated. If any asset is purchased on dates like 11-05-12, 1-3-12 etc then what will be the expired term.

If an assessee has purchased 10 assets of similar nature on 10 different dates during 12-13 then will he have to calculate 10 different rates of depreciation under WDV?

Sir I will be grateful if you answer with little explanations.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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09 April 2015 You will have to calculate based on no. of days used. For eg. in case of motor car the useful life is 8 years and say date of purchase of motor car is 28/02/2011 for Rs. 7165400 and WDV as on 31/03/2014 is Rs. 2840934. So the asset needs to be depreciated upto WDV of Rs. 358,270 (Being 5% of original cost) by 27/02/2019. The rate of depreciation for WDV as per Act is 31.23%. However the same needs to be depreciated in 1793 days being the remainder of the the useful life so rate as per ACT would not be of use. Hence I am using the following formula for calculating individual WDV rate of depreciation for having approximate rate of depreciation to be used for depreciation asset from 01/04/2014:

=1-((358270/2840934)^(1/(1793/365)))

The approximate rate comes to 34.39% which shall be the rate for depreciating the asset from 01/04/2014. The rate is not entirely correct but will depreciate the asset upto 93 - 95% and u need to depreciate the balance in the last year manually.

This is giving approximate rates and I have not come across any other way by which the same could be done. If i get shall post the same.

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Querist : Anonymous

Querist : Anonymous (Querist)

09 April 2015 Thankyou Sir.. It will be really helpful.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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09 April 2015 See this link also for your reference.
https://www.caclubindia.com/share_files/format-of-calculation-of-depreciation-66579.asp

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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09 April 2015 Good detailed reply by Ld. Expert. Also check out file from below link.

https://www.caclubindia.com/files0512/1415307_66291_depreciation.pdf

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