Steps to Calculate Depreciation as per Schedule II of Companies

By | August 15, 2015

Easy Steps to Calculate Depreciation as per Schedule II for the year 2014-15

  1. Classify Assets as per Schedule II.
  2. Determine useful life as per Schedule II.
  3. Calculate Used Life of Assets till 31st Mar 2014.
  4. Determine remaining useful life (useful life as per schedule II- used life till 31st Mar 14).
  5. Remaining useful life may be round off to the nearest full year.
  6. Apply method of Depreciation which is applied in earlier years.
  7. Assets as on 1st Apr 2014 either have remaining useful life or Zero remaining useful life.

We can calculate depreciation for the year of 2014-15 with the help of following examples based on above Steps.

Ex.1        Assets have remaining useful life and method of depreciation is straight line

Useful life of machinery (under Sch II) – 15 yrs

Cost of machinery (installed on 1.4.2009)- Rs. 5,00,000

Depreciation applied under Sch. XIV- SLM 4.75% Per year depreciation Rs. 23,750

[5,00,000-(5×23,750=118750)=3,81,250] WDV as on 1/4/2014 Rs.3,81,250

Remaining useful life under Sch II as on 1.4.2014 – 10 yrs

381250-25000=356250. 10% for 10 years.  Per year depreciation Rs. 35,625.

Ex.2 Assets have no remaining useful life as on 1st Apr 2014 and method of depreciation is straight line

Useful life of machinery (under Sch II( – 15 yrs

Cost of machinery (installed on 1.4.1996)- Rs. 5,00,000

WDV as on 1/4/2014 (after 18 yrs) Rs. 72,500

Remaining useful life under Sch II as on 1.4.2014 – Nil

Residual Value 5% of Rs.500000 Rs. 25000

Amount to be debited to opening balance

of surplus account or Debited to P&L A/c -Rs. 47,500

Ex.3        Assets have remaining useful life as on 1st Apr 2014 and method of depreciation is WDV.

Year Cost/Op.Wdv Depreciation as wdv @13.91% Closing WDV
2009-10 1,000,000 139,100 860,900
2010-11 860,900 119,751 741,149
2011-12 741,149 103,094 638,055
2012-13 638,055 88,753 549,302
2013-14 549,302 76,408 472,894

Calculation of depreciation as per schedule II

Year Opening WDV Depreciation @20%-WDV Closing WDV
2014-15 472,894 94,579 378,315
2015-16 378,315 75,663 302,652
2016-17 302,652 60,530 242,122
2017-18 242,122 48,424 193,697
2018-19 193,697 38,739 154,958
2019-20 154,958 30,992 123,966
2020-21 123,966 24,793 99,173
2021-22 99,173 19,835 79,338
2022-23 79,338 15,868 63,471
2023-24 63,471 12,694 50,777

Calculation of New Depreciation Rate.

R={1-(s/c)^1/n}*100
s=50,000 , c=472,894 , n=10
R={1-(50000/472894)^1/10}*100
R={1-(0.105)^1/10}*100
R={1-0.798}*100
R= 20.2% or say 20%

 

Ex.4 Assets have no remaining useful life as on 1st Apr 2014 and method of depreciation is WDV.

S.no Year Cost/Op.Wdv Depreciation as wdv @13.91% Closing WDV
1 1997-98 1,000,000 139,100 860,900
2 1998-99 860,900 119,751 741,149
3 1999-00 741,149 103,094 638,055
4 2000-01 638,055 88,753 549,302
5 2001-02 549,302 76,408 472,894
6 2002-03 472,894 65,780 407,114
7 2003-04 407,114 56,630 350,484

 

8 2004-05 350,484 48,752 301,732
9 2005-06 301,732 41,971 259,761
10 2006-07 259,761 36,132 223,629
11 2007-08 223,629 31,107 192,522
12 2008-09 192,522 26,780 165,742
13 2009-10 165,742 23,055 142,687
14 2010-11 142,687 19,847 122,840
15 2011-12 122,840 17,087 105,753
16 2012-13 105,753 14,710 91,043
17 2013-14 91,043 12665 78,378

Assets used more than 15 Years. Remaining useful life is Nil. No depreciation

WDV as on 01 Apr 2014 Rs. 78,378.00

Residual Value 5% of Rs.1000000= Rs. 50000

Amount to be debited to opening balance

of surplus account or Debited to P&L A/c -Rs. 28,378.00

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