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Depreciation

sampath (student) (119 Points)

26 September 2018

a firm converted to co. in 2014 ..But they are providing depreciation as per Income tax only not as per Co. act. So I want to change this year.I worked from 14-15 my doubt is I got 50L dep as per co. Act but thy provided only 30 l as per income tax ..now how to adjust that diff in this year 17-18?

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7 Replies

Ruchika Somani (Coaching and Practice in Tax Audit Law) (4429 Points)
Replied 26 September 2018

You can charge it to Profit & Loss account as prior period expenditure

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sampath (student) (119 Points)
Replied 26 September 2018

depreciation diff is same 14-15 ..15-16..16-17... so I am thinking to adjust with reserves and surplus so that current year profit will not get effected PLEASE CORRECT ME

Ruchika Somani (Coaching and Practice in Tax Audit Law) (4429 Points)
Replied 26 September 2018

No, you have to root it through PNL and psecify same in Notes so that its clear that profit is affected due to prior period depreciation

sampath (student) (119 Points)
Replied 26 September 2018

if i do that Current profit will change to loss..and what will be the entry?

Ruchika Somani (Coaching and Practice in Tax Audit Law) (4429 Points)
Replied 26 September 2018

Ya its okay of current profit turns to Loss, you have to follow companies act though.

In income tax computation you can subtract companies act depreciation and charge income tax depreciation and get back profit on which tax will be calculated

Entry will be as usual

Depreciation account debit to those assets credit from which you are deducting depreciation

In audit report prior preiod item needs to be mentioned

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sampath (student) (119 Points)
Replied 26 September 2018

One more dout pls...1/4/2017 opening wdv in books is as per Income tax values...So I pass piror period depreciation differnce and Current year deprecitaion ..Assetwise ...thn closing WDV will be changing as per companies Act? please confirm

Ruchika Somani (Coaching and Practice in Tax Audit Law) (4429 Points)
Replied 26 September 2018

Originally posted by : sampath
	One more dout pls...1/4/2017 opening wdv in books is as per Income tax values...So I pass piror period depreciation differnce and Current year deprecitaion ..Assetwise ...thn closing WDV will be changing as per companies Act? please confirm