Surplus/ Deficit is charged to P & Loss account.ġ. Find out difference as per old and new method.ģ. Recalculation of WDV as per new method.Ģ. ♣ Calculation of effect of change as per As 6 are as follow:ġ. Effect of change should be quantified and disclosed as per AS 6. It is considered as change in the accounting policy. ♣ Change in method of calculation (From WDV to SLM or vice versa)ġ. This becomes an exceptional item as per schedule II. Alternatively, Transitional loss can be charged to profit and loss. Remaining useful life is Nil then carrying amount as on 01-04-2014 after retaining residual value need to be adjust in the opening retain earning after giving effect of deferred tax impact.Ģ. Whenever the asset is retired / disposed then already created revaluation reserve need to transfer to general reserve.ġ. Additional Depreciation cannot be charged to Revaluation reserve as per new companies Act, 2013.Ģ. If SLM is used then carrying amount is amortized over the remaining useful life.ġ. If WDV method is used then find out rate of depreciation as per following formulaģ. Carrying amount as on the beginning of year.Ģ. Calculate the depreciation for the fraction of period calculated in step 1.ġ. Find out rate of depreciation per annum by using useful life as per Schedule II ( comparative rates are given in the reference book based on certain percentage of residual value)ģ. Calculate the period from the date of purchase to the closing of accounting year.Ģ. ♣ Pro rata Depreciation (New Asset acquired during the year) In the 1st yearġ. (1-(s/c)^(1/n))*100 where S = Salvage Value, C= Carrying Amount as on 01-04-14, N= Difference of useful life as per new and old schedule If WDV method is used, need to find out rate of depreciation by using following formula and charge depreciation accordingly. =Depreciable amount / Remaining useful lifeħ. If SLM is followed, Amount of depreciation P. Depreciable Amount = Historical cost/ revalued value – Residual value as calculate in the above step 4.Ħ. Take Residual life at 5% of historical cost or as per management estimate (For value exceeding 5 % technical justification is required.)ĥ. Find out useful life as per new scheduleĤ. ♣ Following are the steps for the calculation of Depreciation on existing Asset:ġ. From the Auditor’s point of view: Brief note on calculation of Depreciation as per New Company’s Act 2013
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