What is the value of a NEW car for calculating depreciation? Is it
(a) Total amount paid to acquire the car (including VAT, Road Tax, Handling Charges, external music system and Insurance); or
(b) Amount paid to acquire the car excluding VAT, Road Tax, Handling Charges and Insurance; or
(c) Insured value of the car.
Reply is sought SOLELY for calculating first year depreciation.
Understandably, the depreciated value for subsequent years would be 15% lower than the previous year's value.
Yes, agree with Raj.
Option (a) is consistent with AS-10 for accounting purposes and Section 43 of the Income Tax act for tax purposes.
Take option (a).
While I agree that VAT and Road Tax could be included for Depreciation, I strongly feel that Insurance is paid on an yearly basis and should be a Deduction, rather than forming component of Depreciation. It will be a recurring cost.
Murali and Sumeet Chartered Accountant
Bengaluru
CA Foundation
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Twenty Point Nine Five Ventures Private Limited
Noida
CA Inter
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Saini Pati Shah & Co LLP, Chartered Accountants
Mumbai
CA Foundation
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CCI
Pro
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