Doubt about schedule 2 of companies act 2013

"Depreciation is the systematic allocation of the depreciable amount of an asset over its
useful life. The depreciable amount of an asset is the cost of an asset or other amount
substituted for cost, less its residual value. The useful life of an asset is the period over
which an asset is expected to be available for use by an entity, or the number of production
or similar units expected to be obtained from the asset by the entity."

on above defination is "systematic allocation of the depreciable amount of an asset over its useful life" means we can use slv and wdv method for depriciation.

and "cost of an asset or other amount substituted for cost" means if asset is revalued can we use that amount substitued for cost

Hello friends,

As we all know Companies Act 2013 has to be implemented from this FY 14-15.

The major change in respect to Asset accounting is, depreciation has to be calculated based on useful life rather than rates of depreciation.

Let’s see examples of possible scenarios

Those who use depreciation rate can calculate useful life by divide 100 by the rate and those who use useful life method already can use the same while seeing the below scenarios.

Asset class	Depreciation rate	Calculated useful life	CO.ACT 2013 Useful life
1	20%	5	5
2	10%	10	5
3	5%	20	30

Scenario 1:

For Asset class 1, useful life is same in old method as well as Companies Act prescribed useful life. So there is no impact in depreciation.

Scenario 2a:

If for some assets in asset class 2 expired useful life is 3, then net book value should be depreciated over remaining useful life of 2 years.

Scenario 2b:

If for some assets in asset class 2 expired useful life is 6 years, then whole net book value should be charged off immediately and has to adjusted in opening retained earnings.

Scenario 3:

For assets in asset class 3, the net book value should be depreciated over remaining useful life.

(i hope this satisfies your query)