Depreciation under companies act 2013 - practical issue

Dear Sir

 

The Companies Act, 2013 requires companies to compute the depreciation in accordance with the Schedule II to the Companies Act which provides useful lives to compute the depreciation.

 

When we follow the method of computation of depreciation pronounced in Sch II of Companies Act under WDV method, the residual value is not matching with Scrap value fixed initially. 

 

Small illustration has been provided below:

 

 

Cost of the asset   100000  
Life of the asset   5 years  
Date put to use   1st July 2015  
Method of Depreciation    Written Down Value method
Scrap value   500  
Rate of Depreciation   65.34%

 
 
Year Depreciation WDV
1                       49,096            50,904
2                       33,262            17,642
3                       11,528              6,114
4                         3,995              2,119
5                         1,385                  734
6                             120                  615
       

Kindly explain how to deal with the difference amount of Rs.115 i.e. 615-500

With regards
Replies (1)

You are not required to do any adjustment.

On disposal of the asset, profit and loss needs to be calculated by considering the WDV figure of Rs. 615 and not the estimated scrap value of Rs. 500.

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