Depreciation rate on safety locker

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Reddy

Reddy (Querist)

07 September 2016 Kindly guide me the rate of Depreciation of safety locker in fixed assets.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

21 July 2024 The depreciation rate for a safety locker would typically fall under the category of "Furniture and Fixtures" as per the Schedule II of the Companies Act, 2013. Here's how you can determine the applicable rate:

### Depreciation Rate:
1. **Category:** Safety lockers are considered part of "Furniture and Fixtures" in most cases.
2. **Depreciation Rate:** According to Schedule II of the Companies Act, 2013, the depreciation rate for furniture and fixtures is 10% under the Written Down Value (WDV) method.

### Method of Depreciation:
- **Written Down Value (WDV) Method:** This method is commonly used for furniture and fixtures, including safety lockers. 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 the safety locker is Rs. 50,000.
- **Year 1 Depreciation Calculation:**
- Depreciation for Year 1 = Rs. 50,000 * 10% = Rs. 5,000
- WDV at the end of Year 1 = Rs. 50,000 - Rs. 5,000 = Rs. 45,000

- **Year 2 Depreciation Calculation:**
- Depreciation for Year 2 = Rs. 45,000 * 10% = Rs. 4,500
- WDV at the end of Year 2 = Rs. 45,000 - Rs. 4,500 = Rs. 40,500

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.
- It's advisable to consult with your auditor or accounting advisor to confirm the specific application of depreciation rates based on the nature and usage of the safety locker in your organization's fixed assets.

By following these guidelines, you can accurately calculate and account for depreciation on safety lockers in your fixed assets register.

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