After bringing Application Guide on the provisions of Schedule-II of the Companies Act, 2013 , the Institute of Chartered Accountants of India (ICAI), with a view to provide an authoritative position of the Council of the Institute on the issues arising out of Schedule II to the Companies Act, 2013, has formulated a Guidance Note on Accounting for Depreciation in companies in the context of Schedule II to the Companies Act, 2013.

GN (A) 35
Guidance Note on Accounting
for Depreciation in companies
in the context of
Schedule II to the Companies Act, 2013

As per ICAI, though Accounting Standard (AS) 6, Depreciation Accounting has already been issued by it,  in the case of companies, some issues arising out of the practical application of Schedule II to the Companies Act, 2013, in the context of AS 6 necessitated this Guidance Note.

The Guidance Note provides guidance on multiple shift depreciation, revaluation of assets, as well as component approach besides providing guidance on estimation of residual value, depreciation on low value items, pro rata depreciation etc. Few illustrations have also been included with view to provide guidance on application of the principles provided in the Guidance Note

Transitional provisions & Effective Date
As per para 64 of the Guidance Note, this Guidance Note will be applicable for accounting periods beginning on or after April 1, 2016; its earlier application is encouraged. Any cumulative impact (net of taxes) due to its applicability should be recognised in revenue reserves and disclosed separately.

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