Read the Basis about income tax depreciation at 

http://www.teachoo.com/214/65/Depreciation-Method/category/Depreciation-Computation-as-per-Income-Tax/

 

Concept of Block of Assets and Depreciation Rates

Example 1:-

In 2014-15  Company purchased  the following assets

Asset Name Purchase Amt Date of Purchase Dep Rate
Machine 1 500000 14-Apr 15%
Furniture 20000 15-Aug 10%
Car 300000 25-Dec 15%
Machine 2 40000 26-Jan 15%

How Many Block of Assets

View Answer

Example 2:-

Continuing previous question, Suppose in 2015-16, Following Assets Were Purchased

Name of Asset Amount Date of Purchase Depreciation Rate
Furniture 75000 20-Apr 10%
Computer 50000 15-Nov 60%

Now how many blocks of Assets
-a-
There are now 4 Blocks
1. Machine 15%
2.Car 15%
3.Furniture 10%
4.Computers 60%


Compute Depreciation in 2015-16

View Answer

SALE OF ASSETS

In this Case,
If all the assets in a Block Sold
Block Cease to Exist.Hence No Depreciation Charged.Short Term Capital Gain/ Loss Computed

If Some Assets Exist in Block,
Depreciation is Computed on Remaining Value(Opening+Purchase-Sales) if any.No Capital Gain/Loss is Computed


Example 3:-

Continuing previous question, Suppose in 2016-17, Car and Machine 1 Sold for 200000 and 350000 respectively 

View Answer

Example 4:-

Resolve Q1 assuming additional depreciation also available

Asset Name Purchase Amt Date of Purchase Dep Rate
Machine 1 500000 14-Apr 15%
Furniture 20000 15-Aug 10%
Car 300000 25-Dec 15%
Machine 2 40000 26-Jan 15%


Additional Depreciationavailableonly on Machines and not on other asset

For Machine 1, full Additional Depreciation will be available but for Machine 2, only 10% will be available

View Answer
  1. Accounts and Finance
  2. Step 5 Preparing Projections and Budgets
Ask Download

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
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 .