Excel for
Chartered Accountants
Note No. 6 to Schedule-II of the Companies Act, 2013 states that useful lives of assets prescribed are based on single shift basis and if an asset is used double shift anytime during the year, rate shall be multiplied by 1.5 for that period. Similarly, for triple shift working anytime during the year, the rate shall be multiplied by 2 for that period. The note further states that extra shift depreciation is not permissible for those assets indicated by No Extra Shift Depreciation (NESD) in Part C of the Schedule.
Example: If an asset, say a general plant and machinery originally bought on 01/04/2004 has a WDV of Rs. 100000/- as on 31-03-2014 and the residual value is estimated at Rs. 5000/-. As per schedule-II, the useful life of the asset is 15 years and thus remaining useful life of the asset as on 01-04-2014 shall be 5 years (15Y – 10Y).
The rate of depreciation to be employed (on WDV basis) for the remaining life of 5 years shall be (1-(s/c)^(1/n))*100 = 45.07
It can be seen by the following table that the remaining value of Rs. 95000/- (100000/- minus 5000/-) is fully amortized during the remaining useful life of the asset leaving only the residual value.
|
Years |
Opening WDV |
Dep. for the Year |
Closing WDV |
|
1 |
100000 |
45072 |
54928 |
|
2 |
54928 |
24757 |
30171 |
|
3 |
30171 |
13599 |
16572 |
|
4 |
16572 |
7469 |
9103 |
|
5 |
9103 |
4103 |
5000 |
Double shift/Triple Shift Depreciation- If the asset in the above example is used for more than single shift working, then as per Schedule-II, its useful life need not to be re-estimated or changed. Instead the depreciation rate (45.07%) shall be increased/multipled by an appropriate percentage/factor which is is as under:
|
Shift |
Percentage to be increased |
Factor for multiplication |
|
Single Shift |
50% |
1.5 |
|
Double Shift |
100% |
2.00 |
Thus the depreciation rate shall change as under:
|
Shift |
Percentage to be increased |
Factor for multiplication |
|
Single Shift |
45.07+(45.07 x 50%) =67.60 |
45.07 x 1.5 =67.60 |
|
Double Shift |
45.07 +(45.07 x 100%) = 90.14 |
45.07 x 2.00 = 90.14 |
Please note that extra shift depreciation shall be allowed only for the period for which the asset is run extra shift during the year.
Excel Depreciation Calculator V 15.10 with extra shifts under Companies Act, 2013 Click Here >>
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Excel Auto Calculation of Useful Lives and Depreciation Rates for Double/Triple Shift Working Under Schedule-II of Companies Act 2013 | 22-05-2015|
