Depreciation calculation

As per Companies Act 2013, the below steps may be followed to computate the depreciation for the assets acquired and put to use prior March 31 2014.

1) Determine the maximum useful lives of the asset as per Part C of schedule II of Companies Act 2013.

2) Determine the  remaining useful life as on 31st March 2014. ( Remaining useful life= Maximum useful life - Lapsed life upto 31-03-2014)

3) Determine the respective residual values( Maximum 5% of the original cost)

4) Determine the remaining depreciable amount. (Opening WDV-residual value)

5(a) Remaining depreciable amount is more than zero with no remaining useful life-----       Remaining depreciable amount will be adjusted with the opening balance of Retained earnings.

5(b) Remaining depreciable amount is more than zero with some  remaining useful life-----Remaining depreciable amount will be systematically provided over the remaining useful life.

  Hope this will be helpfull.

Thanks

Venugopal

In case the rate of Depreciation (under WDV) is to be worked out considering the no . of days (asset if acquired in the middle of the year) then how should it be worked out?

Dear Friends

PFA

Regards

nikhil

Nikihil,

The excel file uploaded by you is password protected. Would you like to provide us the same so that we can read the contents therein.

Regards,

Okz,its only for your ref:,

Friends

Thanks for your responses. Let us take an example. I purchased a desktop for Rs 42,000 on 01/01/13. Depreciation provided @ 40% for FY 2012-13 is 4,200. WDV on 31/03/13 = 37,800. Depreciation for FY 2013-14 = 15,120 leading to a WDV at 22,680.

So,how would the depreciation be calculated for FY 2014-15 with/without effects on opening retained earnings.

Regards,

PFA

Regards

Nikhil

PFA.Unproteted

Regards

nikhil

Useful Life as per the Co Act 2013  : -  3 Years  (Ref Schedule II)

Original Cost of Acquisition : - Rs .42000/-

Date of Acquision             :  01-01-2013

WDV as  on 31-03-2014       :22680

 Useful Life   Expired      :   {"( 31-03-2014)" -  (01-01-2013)"}  / 365 

                                        :  1.25 Year 

  Remaining Useful Life    :    3 Years   -1.25 Years

                                         :         1.75 Years

* RATE OF DEPRECIATION  :  81.9  % For Remaining Years

   Depreciation  Amount     for FY 2014-2015   =  18575     (22680*81.9/100)

 Note:  

          Residual Amount   assumed to be 5 % ( Max as per Co Act 2013)

        Formula    : 1-( 5 %^(1 / Remaining useful life)

          Simplified Version   : 

                    RATE = 1- ( Life square root   5 %)

    if remaining life  = 3 years ,then cubic root of 5 % ,in this case it is 1.75 years