Steps to Calculate Depreciation as per Schedule II of Companies

By | August 15, 2015
(Last Updated On: August 14, 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.

YearCost/Op.WdvDepreciation as wdv @13.91%Closing WDV
2009-101,000,000139,100860,900
2010-11860,900119,751741,149
2011-12741,149103,094638,055
2012-13638,05588,753549,302
2013-14549,30276,408472,894

Calculation of depreciation as per schedule II

YearOpening WDVDepreciation @20%-WDVClosing WDV
2014-15472,89494,579378,315
2015-16378,31575,663302,652
2016-17302,65260,530242,122
2017-18242,12248,424193,697
2018-19193,69738,739154,958
2019-20154,95830,992123,966
2020-21123,96624,79399,173
2021-2299,17319,83579,338
2022-2379,33815,86863,471
2023-2463,47112,69450,777

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.noYearCost/Op.WdvDepreciation as wdv @13.91%Closing WDV
11997-981,000,000139,100860,900
21998-99860,900119,751741,149
31999-00741,149103,094638,055
42000-01638,05588,753549,302
52001-02549,30276,408472,894
62002-03472,89465,780407,114
72003-04407,11456,630350,484

 

82004-05350,48448,752301,732
92005-06301,73241,971259,761
102006-07259,76136,132223,629
112007-08223,62931,107192,522
122008-09192,52226,780165,742
132009-10165,74223,055142,687
142010-11142,68719,847122,840
152011-12122,84017,087105,753
162012-13105,75314,71091,043
172013-1491,0431266578,378

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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