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Amendment In Companies Act,2013 Fixed Assets & Calculating Depreciation Thereon

Amendment In Companies Act,2013 Fixed Assets & Calculating Depreciation Thereon. Treatment of Depreciation as per the Companies Bill, 2013.

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Amendment In Companies Act,2013 Fixed Assets & Calculating Depreciation Thereon

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  1. Amendment In Companies Act,2013Fixed Assets & Calculating Depreciation Thereon CA Gaurav Papriwal

  2. Treatment of Depreciation as per the Companies Bill, 2013 • As per the Companies Bill, Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life (including amortization).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 • From the date of the Companies Bill coming into effect, the carrying amount (WDV) of the asset as on that date: • a.Will be depreciated over the remaining useful life of the asset according to the Bill • b. after retaining the residual value, will be recognized in the opening retained earnings where the remaining useful life is nil CA Gaurav Papriwal

  3. Treatment of Depreciation as per the Companies Bill, 2013 Like Section 205 Of The Companies Act,1956, Section 123 Of The Companies Act,2013 states that no dividend shall be declared unless some depreciation is provided in accordance with schedule II of the Companies Act,2013. Schedule II of the Companies Act,2013, which provide Useful life to compute Depreciation as against the Rates of Depreciation. The useful life of an assets is the period over which is an assets to be available for use by an entity, or the number of production or similar units expected to be obtained from the assets by the entity. Useful Life Of An Asset - As notified for accounting purpose by a regulatory authority constituted under an Act of Parliament or by the Central Government shall be applied in calculating the depreciation to be provided for such asset. CA Gaurav Papriwal

  4. Treatment of Depreciation as per the Companies Bill, 2013 V. Where Plant & Machinery have been use in more than the useful lives as prescribed in the schedule II of the Companies Act, the remaining value has to be transferred to retained earning. For illustration Purpose the rates as prescribed for plant & machineries used in telecommunications and power sector are discussed. CA Gaurav Papriwal

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  6. CA Gaurav Papriwal

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