04 July 2007
my client,s business is related to software and they do follow a wdv method of depriciation... if i calculate depriciation at 40% as per companoes act for computers and software the asset value is negative... is it put as a scrap or what am i to do...
If one calculate depreciation under the Written Down Value(WDV) Method, irrespective of rate of depreciation, the asset value(i.e. Net Block) can not be negative. At best the Net Block will get reduced to zero. The question of scraping etc. of the assets does not arise in this case.
The depreciation rate is to be applied on the amount of Net Block as on the beginning of the year, subject how ever to addition/delation of assets during the year.
CAclubindia
