Depreciation method

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Dharmesh (Querist)

15 June 2014 which is more scientific method - SLM or WDV ?

Why SLM is not very commonly used even though it is allowed by Companies Act ?

Nikhil Kaushik

Nikhil Kaushik (Expert)

15 June 2014 WDV is better than SLM as it atleast accounts for the fact that utility of an asset reduces over time. That helps companies to reflect use of assets in profit and loss a/c

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)

15 June 2014 since in slm a fix rate is applied and u cannot determine that exactly that rate only the asset is being deleted in its value,

Rupesh Jain

Rupesh Jain (Expert)

16 June 2014 in company act both depreciation method is allowed.
under SLM assets value will get NIL after the years. but under WDV method assets value will not get NIL .

if you follow WDV it is same method as Income tax act.

Vishnu Saboo

Vishnu Saboo (Expert)

16 June 2014 both methods are allowed by Company law.
both's final destination also same.
in SLM your depreciation amount is fixed till useful life of ur asset, in WDV it will go down gradually.

Dharmesh

Dharmesh (Querist)

02 July 2014 Thanks all for ur reply,
But can any one tell me which method is most logical method and Y?
We know majority of companies using WDV method but what is the logic behind this.

Pls advise me.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)

04 July 2014 thank you for the same and WDV is more logical.

Vishnu Saboo

Vishnu Saboo (Expert)

04 July 2014 both method are logical thats y exist.
end of both method goes at same place, just the diff is Amount of depreciation, in SLM amount remain fix, in WDV amount of dep gradually goes down.

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