Can anybody suggest how to rectify wrong rate of depreciation charged by mistake under Companies Act. To be more specific Company follows SLM Method & they have charged Furniture rate 6.33% instead of office equipment rate of 7.07 to OFFICE EQUIPMENT right from the inception of Company. Now Company wants to rectify & adopt correct rate 7.07 as per Schedule VI.
Please suggest impact of it in books & in income tax.
Accounting requirement.
1) calculate the depreciation from the begining till date at correct rate i.e. 7.07%
2) Already depraciation provided till date from the begining @ 6.33%
3) Difference arising between them is charged to P&l A/c.
Legal requirement
1) Reason for changes in rate of depreciation
2) Impact of it on P&l A/c
3) Accounting standards and other applicable law are complied or not.
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