Depreciation as per co act, 2013

Originally posted by : Chirag Gupta
	Dear Om Prakash, Rate of Depreciation will be calculated by using the following formula : = [1 - (Salvage Value / WDV as on 31.03.2014)^(1 / Remaining life) ]. Treatment of Salvage Value : Firstly, Salvage value is to be adjusted against WDV as on 31.03.2015 and if any balance left in salvage value then it is transferred to P&L A/c. In your ques, Salvage value is Rs. 2,209/- and WDV as on 31.03.2015 is Rs. 1,308/-. So balance of Rs. 901/- is to be shown in credit side of P&L A/c.

Mr. Chirag, kindly explain the treatment of Salvage value with suitable references as I am not able to get you.

Originally posted by : Om Prakash
	Originally posted by : Chirag Gupta Mr. Chirag, kindly explain the treatment of Salvage value with suitable references as I am not able to get you.

Ok lets take ur example again :

original cost of vehicle is Rs. 44,171/- , Remaining life is 0.43 years. So rate of depreciation will be 59.73%. Salvage value is Rs. 2,209 and WDV as on 31.03.2014 was Rs. 3,259/-. Therefore current year depreciation will  be Rs. 1,951 (3,259*59.73%). 

Now life of asset is over but we have WDV as on 31.03.2015 of Rs. 1,308/- (3259-1951). So the difference of  Salvage value and WDV as on 31.03.2015  is to be shown in P&L a/c.  It has 2 aspects :

If SV - WDV is +ve  , Credited to P&l a/c

If SV - WDV is -ve , Debited to P&l a/c