Depreciation as per new act

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VENKATASAIDAMACHARLA (Querist)
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08 July 2015 Dear Sir

For example if 'A' purchased a software for Rs.50000. And its yearly renewal charges are Rs.5000.How i need to depreciate this?

As per my view we need to depreciate the software as per the life said in the schedule i.e.3 yrs and the renewal charges need to charge to p&l A/c.Is this is correct or not.

And while depreciating we need to consider residual value and finally how we need to account this residual value?

Thanks in Advance.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 July 2015 No life has been specified for software, the life of computers is specified as 3 years. Software can be depreciated over a period of 10 years or its useful life which ever is earlier. No residual value can retained for software it has to be fully depreciated.

VENKATASAIDAMACHARLA

VENKATASAIDAMACHARLA (Querist)
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08 July 2015 Thanks sir

In case of other assets what we need to do with that residual value.I mean how we account that?

VENKATASAIDAMACHARLA

VENKATASAIDAMACHARLA (Querist)
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08 July 2015 Thanks sir

In case of other assets what we need to do with that residual value.I mean how we account that?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 July 2015 No need to account separately residual value. Depreciate only up to 95%, the balance 5% remain in asset value, which has to adjusted while disposing the asset.

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