Depreciation as Co's Act

A/c entries 2446 views 5 replies

Can anybody guide me on following topics.

-> Can I assume the number of days in a year for calculating depreciation or is anything defined in the Co's Act.

-> Should I first calculate the depreciation for the assets sold to arrive at exact profit/loss on sale of such assets. If so plz give some eg.

-> If Dep is to be calculated on the assets before sale, what amount to be considered for calculating depreciation if part of assets is sold.

 

plz reply as early as possible.

 

 

Replies (5)
A year has 365 days, saving leap year which has 366 days. There is no question of asumption on this issue. You certainly should calculate depreciation till the date the asset is used to arrive at the exact profit/loss on disposal of asset. If part of asset is sold. Let's take an example. Let's assume that WDV method is used. WDV as on 01.04.06 = 1 lac Asset sold rs. 50k on 01.10.06 Rate of dep. = 10% Dep on Asset Sold = 50000*10/100*183/365 Dep on remaining asset=50000*10/100
No.of days in a year has to be taken as 365 (366 - for Leap year)only.
Depreciation has to be computed till the date of sale. suppose u ve sold an asset on 31.10.07. then depreciation has to be charged from 1.4.07 to 31.10.07 as prescribed in the act.

WDV as on 1.4.07 has to be consider for depreciation (WDV method) or original cost (SLM method).
If part of the asset is sold then proportionate cost / wdv has to be considered.........
As per the management certification/Technical certification, u can get the % of asset sold. Accordingly u calculate the depreciation. (

Dear its easy to work in an excel sheet as follows:

(a)                 (b)                               (c)                         (d)               (e)                   (f)

WDV           Date 1st april              Date - dt of Sale    No of days       %            Depreciation

a) Value to be mentioned b) & C)  date field in format   e) % to be mentioned

b) ( - ) c) you will get no. of days in excel (d)  it has to be multiplied by b) x d) x  e)/ 365  & u will get the result in f)

Try this all the best

-No. of Days to be taken while calculating Depreciation is 365 (366 in Leap Year.)

-Depreciation has to be computed till the date of sale.

-Before sale you have to calculate depreciaton on the WDV of the asset.


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