Concept of Block of Assets
There is concept of block of assets, all assets of same type treated as one Block and depreciation on them calculated together.
Different Block of Assets and their Rates of Depreciation are
- Building(5% Residential,10% Commercial,100% Temporary or for Developing Infrastructure)
- Furniture & Fittings 10%(It includes Electrical Fittings also)
- Intangible Assets 25%(Patents/Trademarks/Know how/Patent/License)
- Plant and Machinery (15%,30%,40%,80%,100%),
Plant and Machinery includes
- Motor Cars on Hire 30% (45%, If purchase in between 23rd Aug 2019 to 31st March 2020)
- Motor Cars(Others) 15% (30%, If purchase in between 23rd Aug 2019 to 31st March 2020)
- Computers 40%
- Books Annual Publications/Library Business 100%
- Books (Others) 60%
- Rollers/Rolling Mills 80%
- Pollution Control Equipment 100%
General Rate on plant and machinery is 15%
New Amendment
Depreciation @ 80% to be charged on
- Windmills and Any other Specialized devices which run on wind mills
- Any special devices including electric generators and pumps running on wind energy
if they are INSTALLED ON OR AFTER 1.4.2018
(If installed before that period,then Depreciation Rate applicable is 15%)
DOWNLOAD AND TRY
Q1
In 2018-19 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
There are 3 Blocks
- Machine 15%
- Car 15%
- Furniture 10%
Compute Depreciation in 2018-19
View answer
| Name of Asset | Block 1 | Block 2 | Block 3 |
| Machine | Furniture | Car | |
| 15% | 10% | 15% | |
| Opening Value | 0 | 0 | 0 |
| Add | |||
| Purchases 180 days or more | 500000 | 20000 | |
| Purchase Less than 180 days | 40000 | 300000 | |
| Less | |||
| Sales During Year | 0 | 0 | 0 |
| Cl Value before Dep | 540000 | 20000 | 300000 |
| Depreciation | 78000 | 2000 | 22500 |
|
(500000x15%+ 40000 x 15%/2) |
20000x10% | 300000x15%x1/2 | |
| Closing WDV (after Dep) | 462000 | 18000 | 277500 |
Q2
Continuing previous question,Suppose in 2019-20,Following Assets Were Purchased
| Name of Asset | Amount | Date of Purchase | Depreciation Rate |
| Furniture | 75000 | 20-Apr | 10% |
| Computer | 50000 | 15-Nov | 40% |
Now how many block of Assets
View answer
There are now 4 Blocks
1. Machine 15%
2. Car 15%
3. Furniture 10%
4. Computers 40%
Compute Depreciation in 2020-21
View answer
| Name of Asset | Block 1 | Block 2 | Block 3 | Block 4 |
| Machine | Furniture | Car | Computer | |
| 15% | 10% | 15% | 40% | |
| Opening Value | 462000 | 18000 | 277500 | 0 |
| Add | ||||
| Purchases 180 days or more | 0 | 75000 | 0 | 0 |
| Purchase Less than 180 days | 0 | 0 | 50000 | |
| Less | ||||
| Sales During Year | 0 | 0 | 0 | 0 |
| Cl Value before Dep | 462000 | 93000 | 277500 | 50000 |
| Depreciation | 69300 | 9300 | 41625 | 10000 |
| 462000x15% |
(18000+75000) x10% |
277500 x15% |
50000x40% x1/2 |
|
| Closing WDV(after Dep) | 392700 | 83700 | 235875 | 40000 |
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
Q3 Continuing previous question,Suppose in 2019-20,Car and Machine 1 Sold for 200000 and 350000 respectively
View answer
| Name of Asset | Block 1 | Block 2 | Block 3 | Block 4 |
| Machine | Furniture | Car | Computer | |
| 15% | 10% | 15% | 40% | |
| Opening Value | 392700 | 83700 | 235875 | 40000 |
| Add | ||||
| Purchases 180 days or more | 0 | 0 | 0 | 0 |
| Purchase Less than 180 days | 0 | 0 | 0 | 0 |
| Less | ||||
| Sales During Year | 350000 | 0 | 200000 | 0 |
| Cl Value before Dep | 42700 | 83700 | 0 | 40000 |
| Depreciation | 6405 | 8370 | 0 | 16000 |
| 42700x15% | 83700x10% |
No Depreciation as No Assets Left In Block |
40000x40% | |
| Closing WDV(after Dep) | 36295 | 75330 | 0 | 24000 |
| STCL(loss on Sale) | 0 | 0 | -35875 | 0 |
-ea-
Format of Computation
Indirect Method Amount in Crores Profit xx Add Expense disallowed Dep Charged in Profit and Loss
(like as per Companies Act)?
xx Less Expense Allowed Dep as per Income Tax xx PGBP Income xx