Income Tax || Depreciation calculation as per Companies Act 2013

Depreciation Calculation as per companies act 2013:

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount is the cost of the asset or another amount substituted for the cost, less its residual value. The useful life of an asset refers to the period during which the asset is expected to be available for use by the entity, or the number of production or similar units expected to be obtained from the asset by the entity.

Follow the below steps to enter and calculate the deprecation rate as per companies act 2013:

Step 1:

Open the Income Tax software -> Go to  Transactions  →  Balance sheet  → Formats >Fixed Asset Chart   option given in the menu bar:

Select either the Written Down Value (WDV) method or the Straight-Line Method (SLM). In the Straight-Line Method (SLM), an equal amount of depreciation is written off every year. Conversely, in the Written Down Value (WDV) method, depreciation is calculated on the reducing balance of the asset each year.

Step 2:

Select Assets category and click on detail:

 

Step 3:

Details of the opening balance (if the user has already implemented the new depreciation chart last year) and details of additions (for the first-time implementation of the new depreciation chart).

Now enter required details

      (A) Original cost of asset.

      (B) Useful life (in years).

Step 4:

Click on Calculate rate of deprecation:

Note: User can enter depreciation rate manual also.

Step 5:

Click On "Working of calculated deprecation"  to check Deprecation Calculation.

Note: This functionality to calculate the rate is only applicable if you are implementing the new depreciation chart for the first time. If you have already implemented the new depreciation chart last year, you are required to enter the same depreciation rate that you used last year.

Hope This Helps.

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