Depreciation as per companies act 2013
This query is : Resolved
09 August 2015
Date of Purchase of machinery = 01/04/2005
Cost: 1258400/- depreciated by Triple shift @ 27.82%.
Depreciation upto 31.03.2004 = 12,23,396/-
WDV as on 01/4/14 = Rs.35004/-
Useful life prescribed by CA 2013 = 15 years
Residual Value = 1258400*5% = 62920/-
My query is, as depreciation was claimed on Triple shift basis will the useful life be reduced to 5 years (15 years/3=5) (or)
Have to use 15 years..?
Cost: 1258400/- depreciated by Triple shift @ 27.82%.
Depreciation upto 31.03.2004 = 12,23,396/-
WDV as on 01/4/14 = Rs.35004/-
Useful life prescribed by CA 2013 = 15 years
Residual Value = 1258400*5% = 62920/-
My query is, as depreciation was claimed on Triple shift basis will the useful life be reduced to 5 years (15 years/3=5) (or)
Have to use 15 years..?
09 August 2015
First and foremost, let us try to accept that the USEFUL life is the DOMAIN of management and/or manufacturer and/or engineers.
With that note, CA 2013 (I am sure you are using this abbreviation for Companies Act, 2013)nowhere insists year as the unit of measurement.
Under such scenario, my advice is ask the experts to express the useful life in HOURS instead of years.
Your views please.....
With that note, CA 2013 (I am sure you are using this abbreviation for Companies Act, 2013)nowhere insists year as the unit of measurement.
Under such scenario, my advice is ask the experts to express the useful life in HOURS instead of years.
Your views please.....
10 August 2015
Thank you for the reply sir.
Using hours as base for calculation could prove useful for bigger companies that maintain sufficient records of its assets. But in case of medium and small companies it is not practically possible that they had maintained such records. What would be your suggestion in such cases sir..?
Using hours as base for calculation could prove useful for bigger companies that maintain sufficient records of its assets. But in case of medium and small companies it is not practically possible that they had maintained such records. What would be your suggestion in such cases sir..?
10 August 2015
Also Sch II of Companies act 2013 says, if asset is used on triple shit, increase depreciation by 100%.If prescribed useful life for that asset is 10 year, Does that mean it will reduce the useful to 5 years.?
10 August 2015
Substance over form.
You need to take the call as to whether you want to be 'useful life'centric or 'schedule II' centric.
Useful life is to be found out by management and/or engineers and/or valuers. Let us not try to infer some thing based on schedule II...
Let us also not bother about the size/ magnitude of the Company.... If the size of the company is not BIG, as per your interpretation and if it is not practically possible to find out the useful life, my suggestion would be : please take this as the best time and opportunity to suggest the management to go for LLP or partnership or proprietary concern.
Never try to run a company form of organisation at the scale of say LLP or partnership or proprietary concern.
Your views please....
You need to take the call as to whether you want to be 'useful life'centric or 'schedule II' centric.
Useful life is to be found out by management and/or engineers and/or valuers. Let us not try to infer some thing based on schedule II...
Let us also not bother about the size/ magnitude of the Company.... If the size of the company is not BIG, as per your interpretation and if it is not practically possible to find out the useful life, my suggestion would be : please take this as the best time and opportunity to suggest the management to go for LLP or partnership or proprietary concern.
Never try to run a company form of organisation at the scale of say LLP or partnership or proprietary concern.
Your views please....
10 August 2015
Ok sir... Thank you. I will get back if I find out a better solution.
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