Depreciation as per companies act 2013 for Financial year 2014-15 and thereafter. These provisions are applicable from 01.04.2014 vide notification dated 27.03.2014.
- Depreciation is calculated by considering useful life of asset, cost and residual value.
- Any method WDV or SLM can be used.
- Schedule – II contains a list of useful life according to class of asset, the useful life of asset shall not be taken longer than prescribed in this schedule.
- Residual value should not be taken more than 5% of cost of asset
- A company is always free to take useful life shorter than mentioned in schedule – II and residual value less than 5%
- If there is any addition to the asset or asset is sold, discarded, demolished or destroyed then the calculation is made according to the date of such event. In other words, if any asset is purchased or sold then the calculation will be made according to the date of purchase or sold i.e datewise calculation is made.
- Depreciation method used is to be shown in accounts
- Useful life of assets is to be disclosed only when it is taken different from Schedule – II
- For assets in which NESD is mentioned in Schedule – II, the depreciation remains same irrespective of the no. of work shifts.
- For other assets, if the asset is used for double shifts during any time of the year then the depreciation shall be increased by 50% for that period. Similarly if asset is used for triple shifts then depreciation shall be increased by 100% for that period.
If residual value is taken as 5% of cost of asset and life as per schedule – II then the depreciation rates on SLM and WDV basis are given in following pdf file.
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Depreciation Rate chart PDF:::::::>>>>>