SLM DEPRECIATION CALCULATION AS PER COMPANIES ACT 2013

Published On - January 19, 2016

admin Companies Act 2013
Short Title, Extent, Commencement and Application

robot-507811_1920
As discussed in the earlier article depreciation as per Companies Act 2013 can be calculated either by WDV method or SLM Method. Both the methods are old methods as provided by the companies Act 1956. A company can choose one of them. In the earlier article we discussed in detail the calculation of depreciation as per Companies Act 2013 by WDV method. Here we are discussing the SLM depreciation calculation as per Companies Act 2013 by SLM method.
In straight Line Method the depreciation is equally divided over the useful life of the asset unlike WDV method where deprecation is charged at fixed on the WDV amount. The companies Act 2013 provides useful life of the assets based on which the depreciation need to provide unlike companies Act 1956 which had separate rate of depreciation for both WDV and SLM Method.
As Per companies Act 2013, depreciation as per SLM method will be equal allocation of the depreciable amount of an asset over its useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.
As you can find in the Excel we have divided the calculation of depreciation under SLM method in to two parts

  1. Assets purchased upto 31st March 2014
  2. Assets Purchased from 1st April 2014

Now Let us discuss the step wise calculation.
Depreciation for Assets purchased upto 31st March 2014

  • Fill the Date of purchase, Name, original cost, depreciation charged till date and the useful life taken.
  • You need to fill only the while color columns. The brown color columns will get automatically filled.
  • Required “Deprecation for 2014-15” column will be automatically get filled.
  • In most of the cases “Excess Dep (Already Charged)” column will remain bank unless depreciation charged up 31.03.2014 exceeds the Depreciable amount. The same should be adjusted with the retained earnings, if any.
  • Repeat the steps for all category of assets.

Note: If the remaining useful life is Zero, the WDV ( after residual value) will be charged to profit & Loss A/c or retained earning.
Extract from the transition Provision under Schedule II
Untitled.
Depreciation for Assets purchased from 1st April 2014

  • Fill the Date of purchase, Name, original cost and the useful life taken.
  • You need to fill only the while color columns. The brown color columns will get automatically filled.
  • Required “Deprecation for 2014-15” column will be automatically get filled.
  • Repeat the steps for all category of assets.

Now come to the sheet name “combine” where you can link the both sheets asset wise.