21 July 2024
Depreciation rates for UPS batteries typically fall under the category of "Electrical Equipment" or "Power Supply Equipment" as per the Schedule II of the Companies Act, 2013. Here's how you can determine the applicable rate and method:
### Depreciation Rate: 1. **Category:** UPS batteries would generally fall under the category of "Electrical Equipment." 2. **Depreciation Rate:** According to Schedule II of the Companies Act, 2013, electrical equipment has a depreciation rate of 10% under the Written Down Value (WDV) method.
Therefore, the depreciation rate applicable for UPS batteries is **10%** per annum under the WDV method.
### Method of Depreciation: - **Written Down Value (WDV) Method:** This method is typically used for electrical equipment, including UPS batteries. Under the WDV method, depreciation is calculated as a percentage of the diminishing balance of the asset's book value each year.
### Example Calculation: - Suppose the cost of UPS batteries is Rs. 1,00,000. - **Year 1 Depreciation Calculation:** - Depreciation for Year 1 = Rs. 1,00,000 * 10% = Rs. 10,000 - WDV at the end of Year 1 = Rs. 1,00,000 - Rs. 10,000 = Rs. 90,000
- **Year 2 Depreciation Calculation:** - Depreciation for Year 2 = Rs. 90,000 * 10% = Rs. 9,000 - WDV at the end of Year 2 = Rs. 90,000 - Rs. 9,000 = Rs. 81,000
This pattern continues until the WDV of the asset becomes negligible or zero.
### Compliance: - Ensure that these rates and methods are applied consistently in your financial statements as per Schedule II of the Companies Act, 2013. - Consult with your auditor or accounting advisor to confirm the specific application of depreciation rates based on the nature and usage of UPS batteries in your plant machinery setup.
CAclubindia
