Depreciation as per schedule ii companies act 2013
This query is : Resolved
CA Surender Singh
(Querist)
26 December 2014
Dear Sir,
My query is regarding depreciation.as currently we are following W.D.V method for depreciation and want to change to SLM method wef 01-04-2014.under new companies act the useful life of assets have been reduced from 20 yrs to 15 yrs hence,SLM rate comes to 6.33%((100-5)/15)).the SLM rates under the previous companies act was 4.75%. since SLM method of depreciation is to be applied from beginning as it is change in policy so,depreciation upto 31-03-14 is to be recalculated with SLM method.now my question is whether we can apply rate of 6.33% for calculating depreciation for prior period upto 31-03-14.
My query is regarding depreciation.as currently we are following W.D.V method for depreciation and want to change to SLM method wef 01-04-2014.under new companies act the useful life of assets have been reduced from 20 yrs to 15 yrs hence,SLM rate comes to 6.33%((100-5)/15)).the SLM rates under the previous companies act was 4.75%. since SLM method of depreciation is to be applied from beginning as it is change in policy so,depreciation upto 31-03-14 is to be recalculated with SLM method.now my question is whether we can apply rate of 6.33% for calculating depreciation for prior period upto 31-03-14.
CA R SEETHARAMAN
(Expert)
26 December 2014
No prior period calculation is required. Carrying cost as on 01-04-2014 has to be depreciated over the remaining useful life of the asset.
CA Surender Singh
(Querist)
26 December 2014
but we want to opt for different method from very beginning (i.e. SLM TO WDV OR vice versa)whether we can opt for it or not.
CA R SEETHARAMAN
(Expert)
26 December 2014
You can't opt for it you have to follow companies act 2013.
The time of transition to new method of depreciation as per Schedule-II of Companies Act,2013, the requirement of Accounting Standard -6 “Depreciation Accounting” has been violated. Earlier as per Companies Act, 1956, depreciation on fixed asset has been calculated as per the percentage provided in schedule-XIV of Companies Act,1956 and As far as Accounting of depreciation is concerned provision contained in Accounting Standards-6: “Depreciation Accounting” is required to be followed. But Companies Act,2013 vide its Schedule –II prescribe for both calculation of depreciation based on Useful life of individual Asset as well as accounting of depreciation. Hence, In our view the requirement of Schedule-II of companies Act,2013 is always prevail over the treatment prescribed in Accounting Standard-6. -
The time of transition to new method of depreciation as per Schedule-II of Companies Act,2013, the requirement of Accounting Standard -6 “Depreciation Accounting” has been violated. Earlier as per Companies Act, 1956, depreciation on fixed asset has been calculated as per the percentage provided in schedule-XIV of Companies Act,1956 and As far as Accounting of depreciation is concerned provision contained in Accounting Standards-6: “Depreciation Accounting” is required to be followed. But Companies Act,2013 vide its Schedule –II prescribe for both calculation of depreciation based on Useful life of individual Asset as well as accounting of depreciation. Hence, In our view the requirement of Schedule-II of companies Act,2013 is always prevail over the treatment prescribed in Accounting Standard-6. -
CA Surender Singh
(Querist)
26 December 2014
But as per AS 1(disclosure requirement) & AS 6(depreciation accounting) it is change in policy for which we can opt.
CA R SEETHARAMAN
(Expert)
27 December 2014
Consider it as compliance to the requirement of Companies Act 2013.
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