depreciation treatment of asset valued less than Rs.5000

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This query is : Resolved

Sachin Kataria (Querist)

16 July 2008 Hi all
please tell me the treatment of assets of Rs.5000 or less under company law for following:

1) Do we need to apply this concept on initial Build out capital expense for a new site?

2) Suppose we have bought 1000 chairs of Rs.4800 each for setting up a new site, do we need to expense it off in a single year.
i have a similar query for the bulk purchase of Headsets and telecom equipments individually costing less than Rs.5000 purchased for setting up a new site?

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)

16 July 2008 All items of fixed assets which in itself is a complete unit and functins independently and whose costing is upto Rs 5000 may be depreciated @ 100%. It does not make any difference whether the same has been acquired in a bulk purchase or not.

Sachin Kataria

Sachin Kataria (Querist)

16 July 2008 please give the clarification of Ques 1 and tell me whether 100% rate is mandatory for independent items

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)

16 July 2008 In case of purchase of any fixed asset costing upto Rs 5000/-, at new site where it does not form a part of other machinery or asset and functions as an independent asset, the same may be depreciated @ 100%.

Sachin Kataria

Sachin Kataria (Querist)

16 July 2008 Is 100% rate is mandatory or can we charge at lower rate( Normal rates)

CA. Yayati Tyagi

CA. Yayati Tyagi (Expert)

17 July 2008 in my opinion, considering aggregate value of ur purchase, u shud not write them off with 100% dep. u shud carry them like simple furniture and apply regular rate, which i think is 18.1%

Sachin Kataria

Sachin Kataria (Querist)

17 July 2008 more suggestions are welcomed