Meaning of Depreciation- Before knowing the Depreciation Rate as Per Companies Act For AY 2020-21 PDF, we must know the meaning of depreciation. In simple words, depreciation is a reduction in the value of assets over time, due in particulars to wear and tear.
As per companies act 2013, “Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life, where the depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.
The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity.
Depreciation Rate as Per Companies Act For AY 2020-21 PDF Download
Schedule II of Companies Act 2013, is indicative in nature as it indicates instead of specifying the rates of depreciation for various assets and specifies that depreciation should be provided based on the useful life of assets. It also provides 3 depreciation calculation methods, e.g., straight-line method (SLM), Written Down Value Method (WDV), and Unit of Production method.
Companies Act 2013, is applicable for the purpose of depreciation of assets, with effect from 1st April 2014 in the case of a company. The method of computation of depreciation has changed with the implementation of Schedule II. From a rate-based approach, the shifting is made towards the useful life of assets as a basis for determining the rate of depreciation.
Here is the complete chart of Depreciation as per the Companies Act in PDF format, which shows the Depreciation Rate as Per Companies Act For AY 2020-21 PDF
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Compiled by- CA Chirag Agarwal (Practicing Chartered Accountants)