How to Calculate Depreciation Under Company Law 2013

Before knowing, "How to Calculate Depreciation Under Company Law 2013?" you should know why we are studying it. We are studying it because in this world everything is changing. If you have to live in this world, you need to change. It is not your adjustment with situation but if you will not change on your terms, you will have to change on other’s term. Ok come to today topic. After long time, new company law 2013 has come. If you are accountant or auditor in any company which is operating in India, you need to prepare or audit financial statements as per the new company law 2013 instead following old company law 1956. If you did not read it, buy it and read first company law 2013. In company law 2013, there are many changes regarding calculation of depreciation. We know depreciation is the decrease in the value of any fixed asset.

 1. Useful Life of Fixed Asset has Fixed by New Company Law 2013 

 For calculating depreciation, we need working or useful life. Before this law, we can calculate it on our own behalf. But now, maximum useful life of any fixed asset has fixed by law. If management’s estimated useful life is less than company’s law’s estimation, then follow your estimation as useful life. For example building’s useful life is 60 years. But if you think your building will active upto 40 years, then useful life is only 40 years. If company law’s estimation is less than your estimation, then follow company law’s estimation of useful life in years. And factory building’s useful life is 30. Whole list, you can find company law 2013’s book.

 2. Residual Value or Scrap Value of Fixed Asset

 It will not more than 5% of original cost. For example if original cost of building is Rs. 100, then scrap value will only Rs. 5

 3. Depreciation

 Because New company law has applied from 1st April 2014. It means, if you have to calculate written down value of your asset upto 31st march 2014. Then you will have to find the remaining useful life of your fixed asset. And depreciation will be for next

*Depreciation Under Straight line Method = WDV or Carrying Value of Asset on 31st march 2014 / Remaining Useful life

*Depreciation Rate under Written down Method = ((1)- (salvage value or scrap value or residual value/ WDV as on 31.03.2014)^(1/ remaining period of useful life))*100 or brief formula

R= {1 – (s/c)^1/n } x 100

Important : 

  • New rules will apply only tangible fixed assets. 
  • Now if fixed asset is Rs. 5000 and 100% depreciation allow rule will not apply. 
  • New rate under SLM and WDM also given in new law. 
  • For calculating remaining useful life, you have to find purchase date of asset and find total useful life of as per company law 2013. For example, you have buy any fixed asset on 1st April 2010 and it means, we have consumed its life of 4 years upto 1st April 2014 and as per new law 2013, if total useful life is 20 years, then remaining useful life is 16 years. 


Comments on this Website
Share above Content to Your Friends


access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting interest international Internet Introduction of Tally 9 inventory investment invoice IT Japan Job costing journal entries Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting otcei pakistan parents pay pal pdf pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching wikipedia working capital youtube
Accounting Education: How to Calculate Depreciation Under Company Law 2013
How to Calculate Depreciation Under Company Law 2013
Accounting Education
Not found any lecture VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock