It is used by Companies (Private Limited/Limited Companies) while making their books of accounts Hence,it is not of use of Proprietorship and Partnership

Rates Used in Companies Act

 

Both WDV and SLM Methods can be used Rate depends upon Useful Life of Asset In Companies Act Useful life is defined Rates are calculated assuming scrap value of 5%

For example 

For Computer ,useful life is 10 years

 

Depreciation Rates on different assets

Depreciation Chart as per Companies Act Basics - Depreciation Chart

How are Depreciation Rates Calculated

In Companies Act Useful life is defined Rates are calculated assuming scrap value of 5%

For example
For Computer ,useful life is 3 years

Suppose we purchase Computer for 100000 Scrap Value is 5%=5000 Depreciation Charged=100000-5000=95000 Depreciation Charged as per SLM Method is 95000/3=31666.67  Depreciation %=31.667%

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How is Depreciation Presented in Books?

Concept of Accumulated Depreciation is followed where Assets are shown at Gross Value Depreciation of different years are Added (Accumulated)

 

Example 1:-

SLM Method Computation and Presentation

View Answer

 

 

  1. Accounts and Finance
  2. Step 5 Preparing Projections and Budgets
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About the Author

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .