Depreciation

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Shekhar Mishra

FICO Consultant

27 Points Posted on 14 June 2012

Hi experts !!!!!!!!!! I am good ... I hope u do well ..... I have few problem related to depreciation, which is below....... I hope u can answer .......

1. Is it possible to have 2 different rate of depreciation for the same asset? Ex. If I purchase two computer Rs. 30000/- each at the same date. Is there any possibilities to have 2 different rates for the both computer (we are not considering here book depreciation)?

2. A machine purchased on date 01.05.2011 in Rs. 35,00,000 from Australia. It reaches 25.05.2011 to india & started production on dated 05.06.2011 onwards. Due to some technical problem machine had to stop production on date 09.12.2011. It is a onsite warranty, so the engineers will come to India & it will repair here. So, it took nearly 2 months for all process. Now from 15.02.2012 machine starts work. Now, how much will the depreciation with rate? Please briefly……..

Period rate amount

01.05.2011 to 24.05.2011

25.05.2011 to 04.06.2011

05.06.2011 to 09.12.2011

10.12.2011 to 14.02.2012

15.02.2012 to 31.03.2012

Note: All the depreciation rate define on companies Act, 1956 & WDV Method.......

I am eagerly waiting for the reply .......... Thanks in advance

Replies (5)

Giridhar S Karandikar

Team Lead

5675 Points Posted on 14 June 2012

No there can't be two different rates for the same asset. Not sure what do you mean to say that "We are not considering book or tax depreciation". whihc depreciation are you talking about?

As the machine is put to use for less than 180 days so for tax purpose you will get depreciation only of the 50% of the applicable rate. however in practice nobody considers this issue, if the Invoice date is of before Oct then whole depreciation is considered. Under Co's Act you will get proportionate depreciation.

Shekhar Mishra

FICO Consultant

27 Points Posted on 14 June 2012

Thank you, thank you very much for such a quick response ........

1. I was considering any of the depreciation (either book or income tax).... If i purchase 2 laptop (due to some offer we purchased) we have the use of only one laptop now so is it not possible to have 2 different rates for both laptop ?

2. In the 2nd case, i want to know that if the new machine is out of order ( for suppose 7 months), depreciation should be charge or not?

Giridhar S Karandikar

Team Lead

5675 Points Posted on 14 June 2012

Mr Mishra. There are not two rates possible udner the I-T Act for teh same asset. however under the Co's Act, tehre are two rates provided in Schedule XIV for SLM & WDV.

Yes depreciation should be charged. As per AS-6 Depreciation Accounting, depreciation is effluxion, passage of time, wear & tear, so depreciation shud be charged to P&L.