Depreciation as per co act, 2013

Page no : 2

Om Prakash (CA Final Student) (46 Points)
Replied 18 June 2015

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.

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Gajendra T.S. (G) (54 Points)
Replied 18 June 2015

"Dear Gajendra,� 1. Remaining useful life�would be 12.75 years. 2. "C" would be the carrying cost. Relaxation has been given to consider varrying cost for assets purchased before 01.04.2014 so accordingly C would be carrying cost in your case." Thank u very much sir.

Chirag Gupta (Student CA Final ) (30 Points)
Replied 19 June 2015

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

Gajendra T.S. (G) (54 Points)
Replied 19 June 2015

Dear Chirag sir & Omprakash sir, If a pvt.ltd purchase assets (second hand) from an individual, can we take 'date of purchase' as the 'date of transfer' from individual to company? And 'Original cost' as 'Price given to individual'? Pls clarify sir. Thank u.

Gajendra T.S. (G) (54 Points)
Replied 19 June 2015

Dear Chirag Sir, In above caln.of depn.rate, i think depn=59.53% know sir? ((1-(2209/3259)^(1/0.43))*100 = 59.53% Pls clarify and help sir. Thank u.

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Gajendra T.S. (G) (54 Points)
Replied 19 June 2015

Dear Chirag sir, Regarding Salvage value, u hav clarified that Rs.901/- is to be shown in credit side of P&L. Then, what would be the suggested journal entry sir? What needs to be debited? Salvage value of Rs.2209 needs to be shown in FA schedule till it is sold? Pls clarify sir. Thank u.