1. What value of the Motor Car can be consider for calculation of depreciation ?
For (e.g.) If a Motor car costs Rs. 10,00,000/- (including cost of registration & insurance) but the ex-showroom price for the vehicle is only Rs. 8,50,000/-. Then what value should be consider while calculating the depreciation as on March,31st ?
2. Ex-Showroom Price generally includes VAT(imposed by State Governments), Hence if only Ex-showroom price is consider while calculation depreciation then kindly clarify whether amount paid towards VAT is to be included or excluded ?
Awaiting your expert advice.
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Depreciation on motor cars
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Hi
Depreciation is charged on the cost of fixed asset booked in the financials. Further the total cost incurred for the fixed assets should be the amount of booking.
If we are claiming any benefit the credit for VAT we cannot include in the cost of fixed asset otherwise it should be included in the total cost and accordingly depreciation is charged on the same also.
Any contradictory view please let us know
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