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.

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

2. CHALLENGES
under CA 2013
Deciding about Residual
Value of Existing Asset
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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

4. CHALLENGES
under CA 2013
Computation of
depreciation in case of
Double / Triple shift
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5. CHALLENGES
under CA 2013
Finding Current Value of
existing Asset
(in case fixed asset records available)
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6. CHALLENGES
under CA 2013
Finding Current Value of
existing Asset
(in case fixed asset records are
not available…)
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7. CHALLENGES
under CA 2013
Which one to
Supersede in case of
Contradiction b/w
AS-6 &
Schedule II
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8. Team AGBians

9. CHALLENGES
under CA 2013
Applicability of
Schedule II
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10. Team AGBians

11. Schedule II
effective from
1st April, 2014
Notification
S.O.902(E)dated
26th March, 2013
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NOTIFICATION

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

13. Schedule II
Part B
Regulatory Authority /
CG Precede over
Schedule II
Useful life or Residual
Value
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14. Basis of
Depreciation
Useful Life
Part ‘C’ Schedule
II
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15. Team AGBians
Part ‘C’ Schedule II

16. Depreciation Methods
Written Down
Method
Straight Line
Method
V
O
L
U
N
T
A
R
Y
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17. Notification No.
GSR 627 (E)
[F.NO.A17/60/2012-
CL-V] dated
29th August, 2014

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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21. Benefits
Of New
Provisions
Increase in
Govt. Revenue
More
Transparency
Less Dispute in
Classification
of Assets
True & Fair
Financial
Statement
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22. Team AGBians

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

31. AS-26 Intangible
Asset
Amortization means
Depreciation in the value
of Intangible asset
(except toll roads)
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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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35. agbcorplegal@gmail.com
www.agbcorplegal.com
09811386723
Ajay Garg
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Thank You !!