What is depreciation on computer as per companies act 2013?
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Let me brief you about the nature of computers, their parts, laptops according to the companies act 2013. Basically, these are treated as non-current tangible fixed assets. This is because these types of equipment are used in business to generate revenue over its useful life for more than a year. As per the companies act 2013, the following extract of the depreciation rate chart is given for computers.
Giving you a short example, suppose M/s spy Ltd purchased 20 computers worth Rs 30000 each. As per the companies act 2013, the computer’s useful life is taken to be 3 years, and the rate of depreciation rate is 63.16%. Applying the WDV method we can calculate depreciation as follows:
So for the first year, the depreciation amount will be
Cost of computers = Rs 6,00,000 (20*30000)
Salvage value = NIL
Rate of depreciation as per the Act = 63.16%
Therefore depreciation = (6,00,000 – NIL)* 63.16%
= Rs 3,78,960
this amount of depreciation will be shown in the profit & loss account as depreciation charged to computers and the same will be adjusted in the balance sheet. The extract of Profit & Loss and corresponding year Balance sheet is shown below.