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Depreciation

Tarun (Engineer) (49 Points)

19 March 2008

I have Import one new CNC Machine (Rs.1 Cr) from Taiwan. Job doing in this machine is automatic i.e. I have to write/fed programm on Machine Computer and Machine will prepare the job as per the programm.

My question is under what rate I have to claim Depreciation per year for such type of machine?

Also I have purchase SolidEdge+NX CAM software (Rs.3Lakh) for this CNC machine to generate programm as per the Item. With this software I can make model of my item and prepare programm that understand my CNC machine and this programm I have to send to my CNC machine for further process.

My question is weather I can charge Depreciation amount for this software value? If yes then at what rate?

Please clarify my doubt.

Regards

Tarun T Patel.

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1 Replies

pRaSoOn (Articled assistant) (500 Points)
Replied 19 March 2008

Hi tarun....your cnc machine will be merged with remaining block of machinery and depriciation will be charged according to the rate at which whole block is getting depriciated. As far as software is concerned, it is necessary to make cnc run smoothly, hence it will also be added to the cost of machinery but keep in mind the life of software will be treated same as life of machine,i.e.-if CNC has life of 10 years and estimated life of software is more then that, it will be taken as 10 years only from accounting point of view and if the life is less then that of cnc, you will have to depriciate the cost of software in that life of software itself whereas cnc will be continued to get depriciated in normal course for the remaining life.