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Depreciation on items less than 5000

2675 views 2 replies

Respected Experts,

I have come across one issue is regarding depreciation.

As per the rules of depreciation we have to write off the items 100% whose value is less than 5000 but i want to know what about those items whose opening WDV is less than 5000 and have no addittion in the current year.Will they be fully written off or charged at normal depreciation rates?

Please tell me the reason if they will be written of @ 100% rate.

 

Replies (2)

Rate of Depreciation on Assets whose ACTUAL COST is less than INR 5000.00 can be depreciated 100%.
 

However, aggregate cost of individual item of Plant and Machinery costing less than INR 5000.00 constitutes more than 10% of Total Actual Cost of Plant and Machinery, then the rate of depreciation shall be the rate specified in Schedule XIV and such assets shall not be depreciated at 100%.

But in your case, the Actual Cost is not less than INR 5000.00, it is the opening WDV (after charging depreciation as mentioned by you) which is less than INR 5000.00.

So, in my opinion, the block cannot be written off, just because it is less than INR 5000.00 as the Act uses the word "ACTUAL COST".

can we charge 100% depriciation at assets whose individualactual cost is less than 5000 but agrregate cost is more than 5000. for e.g- suppose i paurchased 5 chairs of Rs. 2000 each that is  Rs.10000.can we charge 100% depriciation on it.can we claim deduction of Rs.10000 in one year.as per companies Act.

 


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