How to check depreciation

Follow Application Guide on the provisions of the Schedule II to the Companies Act, 2013 issued by ICAI. Link attached Here : https://www.icai.org/new_post.H T M L?post_id=11504&c_id=240

Dear Sachin Raju

In breif following are the steps to be complied in my opinion :-

1. First verify the opening figure of Gross block of Assets and Depreciation(hereinafter refer as GBA and GBD) with the help of last year signed financials(closing figure).
2. Secondly, original invoices for Assets purchased during the year and capitalised in the same year and in the case of amount capitalise from CWIP then put to use certificate.
3. Third, Sales invoice in case of Fixed Assets sold during the year. Accordingly, deletion column of GBD and GBA will be checked. Here you have to enter the original cost of the asset and depreciation from the begining and till the date of sale.
4. As per the compliance of schedule II of the companies act 2013, you have to check the Fixed Asset Register(FAR) and verify the method(SLM or WDV) applied by the company as per schdule II and management decision as the same will be narrated in the accounting policies.
5. Depreciaiton charged during the year as shown in the addition column of GBD should match with FAR depreciation.
6. Check that depreciaiton calculation done in FAR for addition made during the year or deletion done during the year should be from the date of capitalisation and till the date of deletion respectively.
7. Ask from management, How many shifts are running in a comapny, accordingly depreciation will be charged(i.e., 150%/200% for second and third shift respectively)
8. If company has accepted the life different from as defined in schdule II , then certificate from engineer on the basis of which they want to take that life.
9. If you are asking for financial of 2014-15 then you have to calculate the depreciation as per companies act 1956 and provide the excess value of depreciation charged due to which profit has been affected.
10. If Company has borrowed loan for any Fixed asset the check the compliance of AS 16 i.e. capitalisation of borrowing cost on qualifying Asset.
11. Last but not the least, institute has issued guidance note on schedule II to overcome different type of situation. So refer it.

Hope it will resolve your doubt. In case of any problem feel free to revert me back.

Pradeep Kumar