Depreciation concept got changed in India. Corporate Sector felt the heat of recalculating the Depreciation and this exercise resulted into Preparation of Fixed Assets Records.
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Practical aspects related to Depreciation ScheduleII Companies Act, 2013
1. PRACTICAL ASPECTS
RELATED
TO DEPRECIATION UNDER
COMPANIES ACT, 2013Date: 13th August, 2015
Time: 4:00 PM to 6:00 PM
Venue: Hotel Taj, Sector-17A, Chandigarh
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Organizers-
Young Members Empowerment Committee of ICAI
and Chandigarh Branch of NIRC -ICAI
3. Team AGBians
Prescribed
Class of
Companies –To
follow AS
approved by
NFRA – no such
categorization till
now S133
Companies
regulated by
Regulatory
Authority – as
notified by
regulatory
authority
For other
Companies – As
per Schedule II
Part C
12. SCHEDULE II
PART A
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• Systematic allocation
of depreciable amount
of an asset
DEPRECIATION
• Period over which an
asset to be available
for use
USEFUL LIFE
18. Residual Value
shall not be
more than 5% of
the original cost
NEW AMENDMENTS UNDER SCHEDULE II
An option to adjust the
carrying value of NIL life
assets to retained
earnings
Component
Accounting
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19. Depreciation
S 123(2) Sch . II
Concept of Residual
Value
Concept of Useful
Life
Depreciation includes
Amortization
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20. CA 1956
Depreciation on the basis
of Percentage
No Scrap Value Concept
Rates were prescribed for
Intangible assets also
CA 2013
Depreciation on the basis of
Useful Life(Years)
Scrap value shall be not be
more than 5%of the original
cost
No life prescribed for
Intangible asset
Concept of Componentization
Depreciation to be increased
based on double
shift(50%)Triple shift(100%)
of an asset
No separate rate for
Double/Triple Shift
No Concept of Component
Accounting
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23. POINT TO REMEMBER..!!
To adopt different useful life
than the Schedule II
One needs to provide
justification
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24. POINT TO REMEMBER..!!
To adopt higher residual
value
>5%
One needs to provide
justification
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25. WHY DIFFERENT USEFUL LIFE ?????
Quality of
Assets
Customized
Assets
Superior / Inferior
Technology
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26. PARA 4 Under Part C of Schedule II
Significant
part to the
Total Cost
The part should
have different
useful life than the
main asset
COMPONENT
ACCOUNTING
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27. • F.Y 2014-2015Voluntary
• F.Y 2015-2016 and
thereafterMandatory
Applicability of Component Accounting- Notification
dated 29th August, 2014
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28. POINT TO REMEMBER:- COMPONENTIZATION
AS-10
• Accounting
Standards for
Fixed Assets
AS-16
• Accounting
Standards for
Property, Plant
and Equipment
NOT MANDATORY
MANDATORY
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29. Part 7 in part C
NIL
Net Carrying amount after
Remaining Residual Value
Debit-Opening Retained
Earnings
EXIST
Shall be depreciated over the
useful life of the asset.
Debit-Profit & Loss a/c
Remaining Useful life of an asset as per CA,
2013 as on 01/04/2014
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30. Team AGBians
When Depreciation on pro rata Basis
??
•Addition made to any
assets
•When asset has
been-
Sold
Discarded
Demolished
Destroyed
32. Rate of Amortization- Amount of Amortization *100
Cost of Intangible asset
Amount of Amortization- Actual revenue for the year *100
Projected Revenue from the
Intangible asset
AMORTIZATION CALCULATION
For toll roads (under PPP Model)
33. Is all Intangible
assets governed by
AS-26 ??
Toll Roads created
under Built operate and
transfer or under any
other PPP model
Exception
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34. Does the Intangible asset has
finite life ???
Amortize the
intangible asset
No Amortization
of intangible
asset
Determination of Intangible Asset
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