Urgent: depreciation calculation

depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.

so yes, u need to take residual  value in consideration while calculating dep.

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Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Ordinarily, the residual value of an asset is often insignificant but it should generally be not more than 5% of the original cost of the asset.

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This is the only context in schedule III, which speaks about residual value.

As we see, i places only upper ceiling, which means u can even write off fully

But the archetypal %-s like 25.89, 18.1, 13.91 r all computed conceiving 5% as residual value.

That is if u depreciate assets at that rate, at the end of the day u will have 5% of the cost of the asset remaining.

So u should compute the rate of dep. if u have want to have a different residual value

Yes. You have to reduce the capital asset by its residual value if it is significant for dep calculation

Thanks,

Suri

Dear Member, as per Schedule II of the Companies Act, 2013, it is mandatory to consider residual value of fixed assets while arriving at depreciation rate to be applied for computing depreciation charge on an asset. As per schedule II of the Comapnies Act, 2013, residual value cannot be more than 5% in ordinary cases. However, you may consider residual value NIl if you are not sure about the realisable value of asset after useful life, for the purpose of computation of depreciation.

regards

Amit

PFA