I’m preparing for my CA finals and facing difficulty understanding depreciation as per Companies Act. Can someone please explain how to calculate depreciation on various assets as per prescribed rates? Also, how does it differ from Income tax calculation of depreciation?
Depreciation for companies is calculated as per rates prescribed in Schedule II of Companies Act. It is based on useful life of assets. You need to refer to those rates and apply straight line method to calculate depreciation.
Depreciation under Income tax and Companies act are calculated differently. Income tax allows more rates and methods while Companies act has fixed rates and straight line method only.
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