Depreciation Rate chart & Accounting under Schedule-II Companies Act-2013 :Ebook by ICAI

Keeping in view the changing economic environment as well as the growth of our economy, the Companies Act, 2013 was enacted to improve corporate governance and to further strengthen regulations for the companies. The Act has introduced some new concepts in the Indian context which are not only remarkable but also setting a tone for making our Law at par with the best International Standards and Practices. Further, the Act requires companies to compute the depreciation in accordance with the Schedule II which provides useful lives to compute the depreciation.

The Corporate Laws & Corporate Governance Committee (CL&CGC) of the Institute of Chartered Accountants of India (ICAI) has taken the initiative of bringing out an Application Guide on the Provisions of Schedule II to the Companies Act, 2013 (Download link given below)to provide application guidance to the members of the profession for implementation of the requirements of Schedule II as it would be required for preparation of financial statements.

Key changes in the Schedule II to the Companies Act, 2103 as compared to erstwhile Schedule XIV to the Companies Act, 1956 are as follows:

1.  Schedule II prescribes indicative useful lives of various assets instead of Straight Line Method (SLM)/ Written Down Value (WDV) rates for calculating depreciation
2. Useful lives prescribed for tangible assets only
3. No life prescribed for intangible assets. Notified accounting standard to govern the same
4. Depreciation is systematic allocation of the depreciable amount of an asset over its useful life.
5. The depreciable amount of an assets is the cost of an asset or other amount substituted for cost, less its residual value
6. Useful life is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity. Schedule XIV of Companies Act, 1956 does not include such requirement.
7. Companies are allowed to follow different useful lives/residual value if an appropriate justification is given supported by technical advice.
8. Component accounting and useful life of a significant part of an asset to be determined separately
9.  No separate rate for double/ triple shift; depreciation to be increased based on the double shift/triple shift use of the assets
10. Useful lives of fixed assets prescribed under schedule II are Act different from those envisaged under Schedule XIV of the Companies Act, 1956.
11. No reference to depreciation on low value assets.

Both Links have same result.
Download EBook on Depreciation Accounting By ICAI