Here is a list of important points to remember while calculating Depreciation as per Companies Act, 2013:
- Schedule II of the Companies Act, 2013 for calculating depreciation is applicable only on tangible assets. For calculating amortisation on intangible assets, the companies have to follow the applicable accounting standard, AS 26.
- Depreciation as per Companies Act, 2013 depends on the useful life of various assets as defined in the Schedule II to the Companies Act, 2013.
- Rates of depreciation are derived from the useful life of assets. No separate rates of depreciation are defined in the Act.
- 5% is the residual value of assets prescribed as per schedule II of the Companies Act, 2013. Accordingly, 95% of the original cost of the asset only has to be depreciated.
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