Rates of depreciation - Revision of rate of depreciation in Schedule XIV - Companies Law - Circular : No. 14/93

Circular : No. 14/93 [F. No. 1/12/92-CL-V], dated 20-12-1993. Subject:- Rates of depreciation - Revision of rate of depreciation in Schedule XIV I am directed to enclose herewith a copy of Notification No. GSR 756(E), dated 16-12-1993 in respect of revision of the rates of depreciation in Schedule XIV to the Companies Act, 1956, with a request that these changes may please be circulated widely and brought to the notice of all your constituent member-companies. 2. The changes made in Schedule XIV as per the enclosed amending Notification shall apply in respect of the accounts of the companies closed on or after the date of issue of the notification. The revised rates of depreciation shall apply to assets acquired by the companies on or after that date. As regards applicability of these changes to existing assets, the companies are advised to follow the recommendations of Institute of changes may please be circulated widely and brought to the notice of all Accounting for Depreciation in Companies , reproduced below: (a) A company following the written down value (W.D.V.) method of depreciation in respect of its assets should apply the relevant W.D.V. rates prescribed in Schedule XIV to the written down value as at the end of the previous financial year as per the books of the company. (b) A company following the straight line method of depreciation in respect of its assets existing on the date of Schedule XIV coming into force may adopt any of the following alternative bases for computing the depreciation charge : (i) The specified period may be recomputed by applying to the original cost, the revised rate as prescribed in Schedule XIV and depreciation charge calculated by allocating the unamortized value as per the books of account over the remaining part of the recomputed specified period. (ii) The company can continue to charge depreciation on straight line basis at old rates in respect of assets existing on the date on which the new provisions relating to depreciation came into force. (iii) SLM rates prescribed in Schedule XIV can be straightaway applied to the original cost of all the assets including the existing assets from the year of change of the rate.