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What Schedule II does in two minutes
Residual-value ceiling
Ordinary statutory limit; a different position requires disclosure, justification and technical advice.
Part C asset lines
The complete current useful-life register is reproduced and rate-converted for working convenience.
Double-shift uplift
Only for the period of double-shift use and only where the asset is not marked NESD.
Triple-shift uplift
Base depreciation doubles for the qualifying triple-shift period.
Apply the rules in this order
Tangible PPE, intangible asset, right-of-use asset, investment property or held-for-sale asset?
Part B overrides Schedule II where a statutory regulator has notified life or residual value.
Map tangible assets to Part C; use 5% residual ceiling unless supported otherwise.
Apply components, method, availability date, shift and disclosure controls.
Definitions, ordinary useful lives and residual value
Depreciation spreads the depreciable amount - cost or substituted cost less residual value - over the period or production units expected from the asset.
For every material asset, retain the life, residual-value and method conclusion together with technical, operational and Board/audit evidence.
Revenue-based amortisation route
Projected revenue is reviewed at each financial year-end and adjusted for changes in estimates so the entire cost is amortised over the concession period.
Cost: ₹500 crore; concession period: 20 years; construction: 2 years; amortisation period: 18 years; projected revenue: ₹600 crore; first-year actual revenue: ₹5 crore.
First-year amortisation: ₹500 crore × ₹5 crore ÷ ₹600 crore = approximately ₹4.17 crore. Rate = approximately 0.83%.
This exceptional revenue method concerns qualifying road-project intangible assets under BOT, BOOT or similar PPP routes. Ordinary tangible roads remain within Part C.
| Year | Revenue (₹ crore) | Status |
|---|---|---|
| Year 1 | 5 | Actual |
| Year 2 | 7.5 | Estimate - becomes actual at year-end |
| Year 3 | 10 | Estimate - becomes actual at year-end |
| Year 4 | 12.5 | Estimate - becomes actual at year-end |
| Year 5 | 17.5 | Estimate - becomes actual at year-end |
| Year 6 | 20 | Estimate - becomes actual at year-end |
| Year 7 | 23 | Estimate - becomes actual at year-end |
| Year 8 | 27 | Estimate - becomes actual at year-end |
| Year 9 | 31 | Estimate - becomes actual at year-end |
| Year 10 | 34 | Estimate - becomes actual at year-end |
| Year 11 | 38 | Estimate - becomes actual at year-end |
| Year 12 | 41 | Estimate - becomes actual at year-end |
| Year 13 | 46 | Estimate - becomes actual at year-end |
| Year 14 | 50 | Estimate - becomes actual at year-end |
| Year 15 | 53 | Estimate - becomes actual at year-end |
| Year 16 | 57 | Estimate - becomes actual at year-end |
| Year 17 | 60 | Estimate - becomes actual at year-end |
| Year 18 | 67.5 | Estimate - becomes actual at year-end |
| Total | 600 |
Regulatory life or residual value overrides Part C
Before using the Part C table, ask whether the entity's sector regulator has notified an accounting life or residual value for that specific asset.
Retain the operative notification, asset mapping, effective date and reconciliation to the fixed-asset register. Industry practice without a binding notification is not automatically a Part B override.
Useful lives, NESD status and indicative rates
The lives and NESD flags below reproduce the current consolidated Schedule II classification. The SLM and WDV columns are mathematical illustrations using a 5% residual value; they are not statutory rates.
| Schedule class | Nature of asset | Useful life | NESD | Indicative SLM | Indicative WDV |
|---|---|---|---|---|---|
| I. Buildings | Buildings (other than factory buildings) - RCC frame structure | 60 years | Yes | 1.58% | 4.87% |
| I. Buildings | Buildings (other than factory buildings) - other than RCC frame structure | 30 years | Yes | 3.17% | 9.50% |
| I. Buildings | Factory buildings | 30 years | Yes | 3.17% | 9.50% |
| I. Buildings | Fences, wells and tube wells | 5 years | Yes | 19.00% | 45.07% |
| I. Buildings | Other buildings, including temporary structures | 3 years | Yes | 31.67% | 63.16% |
| II. Bridges | Bridges, culverts, bunders, etc. | 30 years | Yes | 3.17% | 9.50% |
| III. Roads | Carpeted roads - RCC | 10 years | Yes | 9.50% | 25.89% |
| III. Roads | Carpeted roads - other than RCC | 5 years | Yes | 19.00% | 45.07% |
| III. Roads | Non-carpeted roads | 3 years | Yes | 31.67% | 63.16% |
| IV. General plant | Plant and machinery other than continuous process plant, not otherwise specified | 15 years | No | 6.33% | 18.10% |
| IV. General plant | Continuous process plant for which no special life is prescribed | 25 years | Yes | 3.80% | 11.29% |
| IV(a). Motion pictures | Cinematograph film production/exhibition, recording/reproducing, developing, printing, editing, synchronisers and studio lights (excluding bulbs) | 13 years | No | 7.31% | 20.58% |
| IV(a). Motion pictures | Projecting equipment for exhibition of films | 13 years | No | 7.31% | 20.58% |
| IV(b). Glass | Recuperative and regenerative glass-melting furnaces and related plant | 13 years | No | 7.31% | 20.58% |
| IV(b). Glass | Moulds | 8 years | Yes | 11.88% | 31.23% |
| IV(b). Glass | Float glass melting furnaces | 10 years | Yes | 9.50% | 25.89% |
| IV(c). Mines | Portable underground machinery and earth-moving machinery used in open-cast mining | 8 years | Yes | 11.88% | 31.23% |
| IV(d). Telecom | Towers | 18 years | Yes | 5.28% | 15.33% |
| IV(d). Telecom | Transceivers, switching centres, transmission and other network equipment | 13 years | Yes | 7.31% | 20.58% |
| IV(d). Telecom | Ducts, cables and optical fibre | 18 years | Yes | 5.28% | 15.33% |
| IV(d). Telecom | Satellites | 18 years | Yes | 5.28% | 15.33% |
| IV(e). Oil and gas | Refineries | 25 years | Yes | 3.80% | 11.29% |
| IV(e). Oil and gas | Oil and gas assets (including wells), processing plant and facilities | 25 years | Yes | 3.80% | 11.29% |
| IV(e). Oil and gas | Petrochemical plant | 25 years | Yes | 3.80% | 11.29% |
| IV(e). Oil and gas | Storage tanks and related equipment | 25 years | Yes | 3.80% | 11.29% |
| IV(e). Oil and gas | Pipelines | 30 years | Yes | 3.17% | 9.50% |
| IV(e). Oil and gas | Drilling rig | 30 years | Yes | 3.17% | 9.50% |
| IV(e). Oil and gas | Field operations: portable boilers, drilling tools, well-head tanks, etc. | 8 years | Yes | 11.88% | 31.23% |
| IV(e). Oil and gas | Loggers | 8 years | Yes | 11.88% | 31.23% |
| IV(f). Power | Thermal, gas or combined-cycle power generation plant | 40 years | Yes | 2.38% | 7.22% |
| IV(f). Power | Hydro power generation plant | 40 years | Yes | 2.38% | 7.22% |
| IV(f). Power | Nuclear power generation plant | 40 years | Yes | 2.38% | 7.22% |
| IV(f). Power | Transmission lines, cables and other network assets | 40 years | Yes | 2.38% | 7.22% |
| IV(f). Power | Wind power generation plant | 22 years | Yes | 4.32% | 12.73% |
| IV(f). Power | Electric distribution plant | 35 years | Yes | 2.71% | 8.20% |
| IV(f). Power | Gas storage and distribution plant | 30 years | Yes | 3.17% | 9.50% |
| IV(f). Power | Water distribution plant, including pipelines | 30 years | Yes | 3.17% | 9.50% |
| IV(g). Steel | Sinter plant | 20 years | No | 4.75% | 13.91% |
| IV(g). Steel | Blast furnace | 20 years | No | 4.75% | 13.91% |
| IV(g). Steel | Coke ovens | 20 years | No | 4.75% | 13.91% |
| IV(g). Steel | Rolling mill in steel plant | 20 years | No | 4.75% | 13.91% |
| IV(g). Steel | Basic oxygen furnace converter | 25 years | No | 3.80% | 11.29% |
| IV(h). Non-ferrous metals | Metal pot line | 40 years | Yes | 2.38% | 7.22% |
| IV(h). Non-ferrous metals | Bauxite crushing and grinding section | 40 years | Yes | 2.38% | 7.22% |
| IV(h). Non-ferrous metals | Digester section | 40 years | Yes | 2.38% | 7.22% |
| IV(h). Non-ferrous metals | Turbine | 40 years | Yes | 2.38% | 7.22% |
| IV(h). Non-ferrous metals | Equipment for calcination | 40 years | Yes | 2.38% | 7.22% |
| IV(h). Non-ferrous metals | Copper smelter | 40 years | Yes | 2.38% | 7.22% |
| IV(h). Non-ferrous metals | Roll grinder | 40 years | Yes | 2.38% | 7.22% |
| IV(h). Non-ferrous metals | Soaking pit | 30 years | No | 3.17% | 9.50% |
| IV(h). Non-ferrous metals | Annealing furnace | 30 years | No | 3.17% | 9.50% |
| IV(h). Non-ferrous metals | Rolling mills | 30 years | No | 3.17% | 9.50% |
| IV(h). Non-ferrous metals | Equipment for scalping, slitting, etc. | 30 years | Yes | 3.17% | 9.50% |
| IV(h). Non-ferrous metals | Surface miner, ripper dozer, etc., used in mines | 25 years | No | 3.80% | 11.29% |
| IV(h). Non-ferrous metals | Copper refining plant | 25 years | Yes | 3.80% | 11.29% |
| IV(i). Medical | Electrical machinery, X-ray/electrotherapeutic apparatus and diagnostic equipment such as CT scan, ultrasound and ECG monitors | 13 years | Yes | 7.31% | 20.58% |
| IV(i). Medical | Other medical and surgical equipment | 15 years | Yes | 6.33% | 18.10% |
| IV(j). Pharma/chemicals | Reactors | 20 years | Yes | 4.75% | 13.91% |
| IV(j). Pharma/chemicals | Distillation columns | 20 years | Yes | 4.75% | 13.91% |
| IV(j). Pharma/chemicals | Drying equipment, centrifuges and decanters | 20 years | Yes | 4.75% | 13.91% |
| IV(j). Pharma/chemicals | Vessels and storage tanks | 20 years | Yes | 4.75% | 13.91% |
| IV(k). Civil construction | Concreting, crushing, piling and road-making equipment | 12 years | No | 7.92% | 22.09% |
| IV(k). Civil construction | Heavy-lift cranes with capacity above 100 tonnes | 20 years | No | 4.75% | 13.91% |
| IV(k). Civil construction | Heavy-lift cranes with capacity below 100 tonnes | 15 years | No | 6.33% | 18.10% |
| IV(k). Civil construction | Transmission-line and tunnelling equipment | 10 years | Yes | 9.50% | 25.89% |
| IV(k). Civil construction | Earth-moving equipment | 9 years | No | 10.56% | 28.31% |
| IV(k). Civil construction | Other material-handling, pipeline and welding equipment | 12 years | Yes | 7.92% | 22.09% |
| IV(l). Salt works | Plant and machinery used in salt works | 15 years | Yes | 6.33% | 18.10% |
| V. Furniture | General furniture and fittings | 10 years | Yes | 9.50% | 25.89% |
| V. Furniture | Furniture and fittings used in hotels, restaurants, boarding houses, educational institutions, libraries, welfare centres, meeting halls, cinemas, theatres, circuses or let on hire for functions | 8 years | Yes | 11.88% | 31.23% |
| VI. Motor vehicles | Motorcycles, scooters and other mopeds | 10 years | Yes | 9.50% | 25.89% |
| VI. Motor vehicles | Motor buses, lorries, cars and taxis used in a business of running them on hire | 6 years | Yes | 15.83% | 39.30% |
| VI. Motor vehicles | Motor buses, lorries and cars other than those used in a business of running them on hire | 8 years | Yes | 11.88% | 31.23% |
| VI. Motor vehicles | Motor tractors, harvesting combines and heavy vehicles | 8 years | Yes | 11.88% | 31.23% |
| VI. Motor vehicles | Electric vehicles, including battery-powered or fuel-cell-powered vehicles | 8 years | Yes | 11.88% | 31.23% |
| VII. Ships | Ocean-going bulk carriers and liner vessels | 25 years | Yes | 3.80% | 11.29% |
| VII. Ships | Crude tankers, product carriers and easy chemical carriers, with or without conventional tank coatings | 20 years | Yes | 4.75% | 13.91% |
| VII. Ships | Chemical and acid carriers with stainless-steel tanks | 25 years | Yes | 3.80% | 11.29% |
| VII. Ships | Chemical and acid carriers with other tanks | 20 years | Yes | 4.75% | 13.91% |
| VII. Ships | Liquefied-gas carriers | 30 years | Yes | 3.17% | 9.50% |
| VII. Ships | Conventional large passenger vessels also used for cruises | 30 years | Yes | 3.17% | 9.50% |
| VII. Ships | Coastal-service ships of all categories | 30 years | Yes | 3.17% | 9.50% |
| VII. Ships | Offshore supply and support vessels | 20 years | Yes | 4.75% | 13.91% |
| VII. Ships | Catamarans and other high-speed passenger ships or boats | 20 years | Yes | 4.75% | 13.91% |
| VII. Ships | Drill ships | 25 years | Yes | 3.80% | 11.29% |
| VII. Ships | Hovercraft | 15 years | Yes | 6.33% | 18.10% |
| VII. Ships | Fishing vessels with wooden hull | 10 years | Yes | 9.50% | 25.89% |
| VII. Ships | Dredgers, tugs, barges, survey launches and similar ships mainly used for dredging | 14 years | Yes | 6.79% | 19.26% |
| VII. Inland vessels | Speed boats operating on inland waters | 13 years | Yes | 7.31% | 20.58% |
| VII. Inland vessels | Other vessels operating on inland waters | 28 years | Yes | 3.39% | 10.15% |
| VIII. Aircraft | Aircraft or helicopters | 20 years | Yes | 4.75% | 13.91% |
| IX. Railway assets | Railway sidings, locomotives, rolling stock, tramways and railways used by concerns other than railway concerns | 15 years | Yes | 6.33% | 18.10% |
| X. Ropeways | Ropeway structures | 15 years | Yes | 6.33% | 18.10% |
| XI. Office equipment | Office equipment | 5 years | Yes | 19.00% | 45.07% |
| XII. Computers | Servers and networks | 6 years | Yes | 15.83% | 39.30% |
| XII. Computers | End-user devices such as desktops and laptops | 3 years | Yes | 31.67% | 63.16% |
| XIII. Laboratory | General laboratory equipment | 10 years | Yes | 9.50% | 25.89% |
| XIII. Laboratory | Laboratory equipment used in educational institutions | 5 years | Yes | 19.00% | 45.07% |
| XIV. Electrical | Electrical installations and equipment | 10 years | Yes | 9.50% | 25.89% |
| XV. Hydraulic | Hydraulic works, pipelines and sluices | 15 years | Yes | 6.33% | 18.10% |
Notes 1 to 8 and their practical effect
Factory building
Office, godown and staff-quarter portions do not automatically inherit the factory-building classification.
Pro-rata basis
Use actual addition/availability and disposal dates rather than a full-year charge by convenience.
Components
Material parts with different lives are separately depreciated. This is an asset-recognition and FAR design issue, not merely a year-end calculation.
Shift evidence
Extra depreciation needs asset-specific evidence of double/triple-shift operation and confirmation that the item is not NESD.
SLM, WDV and units of production
Straight-line method
Appropriate where benefits are consumed relatively evenly.
Written-down-value method
The derived rate should reduce carrying amount to the intended residual over the estimated life.
Units of production
Appropriate where output or usage drives consumption and can be estimated reliably.
Available for use, additions, idle assets and disposal
Start point
Under accounting standards, depreciation starts when the asset is available for use - in the location and condition necessary for intended operation. It need not wait for first sale or full-capacity output.
End point
Pro-rate up to sale, discard, demolition or destruction. Under Ind AS, depreciation ceases earlier if the asset is classified as held for sale under Ind AS 105.
Idle asset
Temporary idle status normally does not stop time-based depreciation because economic benefits may still be consumed through obsolescence and passage of time.
Capital work-in-progress
No depreciation while the asset is not yet available for use; test whether trial-run output, commissioning evidence and readiness criteria establish the correct capitalisation date.
Single, double and triple shift
Annual single-shift SLM charge is ₹12 lakh. The asset works single shift for 8 months and double shift for 4 months. Charge = ₹12 lakh × (8/12 + 1.5 × 4/12) = ₹14 lakh.
For an asset marked NESD, do not apply the 50% or 100% uplift. Base depreciation still runs for the normal available-for-use period.
Separate significant parts with different useful lives
Component identification
- Significance to total asset cost
- Different economic life or replacement cycle
- Reliable allocation of original or replacement cost
- Separate maintenance or inspection pattern
Replacement accounting
- Capitalise the replacement if recognition criteria are met
- Derecognise the old component's carrying amount
- Estimate old carrying amount if not separately recorded
- Update FAR and physical tag
Cost ₹10 crore: structure ₹8 crore over 60 years, elevator ₹1 crore over 15 years and HVAC ₹1 crore over 10 years, all with 5% residual. Annual SLM charge is ₹28.50 lakh, compared with ₹15.83 lakh if the entire amount were incorrectly depreciated over 60 years.
Different useful life or residual value
Life differs from Part C
Document engineering design, usage intensity, operating environment, legal limits, maintenance strategy, obsolescence and comparable experience.
Residual exceeds 5%
Support the recoverable disposal estimate for an asset already at expected end-of-life age and condition; do not use today's resale value without adjustment.
Financial-statement disclosure
Describe the difference, amount/materiality, technical basis and effect where required by Schedule II and applicable accounting standards.
Schedule II, Ind AS 16 and revised AS 10
| Area | Schedule II | Ind AS 16 | AS 10 |
|---|---|---|---|
| Primary role | Statutory useful-life and residual-value framework for companies | Recognition, measurement, components, depreciation, impairment interaction and disclosure | Recognition, measurement, components, depreciation and disclosure for AS companies |
| Useful life | Part C life ordinarily applies; a different life needs disclosure and technical justification | Management estimate reviewed at least at each year-end; Schedule II remains the Companies Act benchmark | Estimate reviewed at each year-end; Schedule II remains the Companies Act benchmark |
| Residual value | Ordinarily not more than 5% of original cost; departure needs support and disclosure | Estimate based on amount obtainable at end-of-life age/condition; reviewed annually | Estimate reviewed at each year-end; departure from Schedule II needs statutory support |
| Components | Mandatory under Note 4 for significant parts with different lives | Significant parts are depreciated separately | Significant parts are depreciated separately |
| Start depreciation | Schedule note requires pro-rata addition; accounting standards define availability | When available for use | When available for use |
| Idle assets | No express stop rule | Depreciation generally continues unless fully depreciated/held for sale/derecognised | Depreciation generally continues while recognised and available for use |
| Method change | Read with applicable standard | Change in estimate if consumption pattern changes; prospective application | Applied prospectively as a change in estimate |
| Revaluation | Not a measurement standard | Cost or revaluation model by class | Cost or revaluation model by class |
Areas that require more than a useful-life lookup
Land
Freehold land ordinarily has an indefinite life and is not depreciated; finite leasehold rights and restoration obligations require separate analysis.
Leasehold improvements
Use the shorter period supported by economic life and enforceable lease/right-of-use circumstances, considering renewal certainty.
Right-of-use assets
Depreciate under Ind AS 116 over useful life or lease term according to transfer-of-ownership and purchase-option conclusions.
Investment property
Ind AS 40 entities use the cost model in India and apply Ind AS 16 depreciation principles to the building component.
Revalued PPE
Depreciation is based on the revalued amount less residual value over remaining useful life; revaluation is not a substitute for depreciation.
Impairment
Impairment and depreciation are separate. Future depreciation is revised using the post-impairment carrying amount and remaining life.
Major inspections
Capitalise qualifying inspection cost and derecognise the remaining carrying amount of the previous inspection component.
Spares and standby equipment
Classify as PPE when recognition criteria and multi-period use are met; otherwise treat as inventory.
Fully depreciated but used assets
Investigate estimate quality, component gaps and FAR accuracy. Do not invent depreciation after the depreciable amount has reached residual value.
Eight examples for accounts, audit and exams
1. SLM machinery
Cost ₹1 crore; residual 5%; life 15 years. Annual depreciation = ₹95 lakh ÷ 15 = ₹6.333 lakh.
2. WDV machinery
Same facts. Indicative WDV rate = 1 - 5%1/15 = 18.10%. First-year charge on ₹1 crore is approximately ₹18.10 lakh, subject to pro-rating.
3. Mid-year readiness
Machine delivered 1 July but ready after installation on 1 October. Depreciation starts on 1 October, not delivery, advance payment or first commercial sale.
4. Disposal
Vehicle is sold on 30 September. Charge depreciation only up to the disposal date and separately recognise the gain or loss against carrying amount.
5. Double shift
Base annual depreciation ₹12 lakh; four months double shift and eight months single shift. Charge = ₹14 lakh, assuming not NESD.
6. Different technical life
A corrosive-process machine maps to 15 years but engineering evidence supports 8 years. Use 8 only with asset-specific technical evidence and the required financial-statement disclosure.
7. Residual value 10%
A 10% residual is not automatically prohibited, but exceeds the ordinary 5% ceiling. It needs end-of-life disposal evidence, technical support and disclosure.
8. Toll road
Cost ₹500 crore; current revenue ₹5 crore; revised total projected revenue ₹600 crore. Current amortisation = ₹4.17 crore.
Fixed-asset and depreciation control checklist
Master-data fields
- Asset ID and location
- Capitalisation/available-for-use date
- Schedule II class and life
- Component and parent ID
- Residual value and method
- NESD/shift flag
- Regulatory override
- Technical report reference
Year-end procedures
- Invoice-to-FAR and FAR-to-GL reconciliation
- Physical verification and idle/obsolete review
- Addition and disposal cut-off
- Component replacements and derecognition
- Shift log reconciliation
- Life/residual review
- Impairment indicators
- Disclosure and tax-deferred tax reconciliation
| Assertion | Risk | Core evidence |
|---|---|---|
| Completeness | Capital additions, internally constructed assets and restoration costs captured | Invoice/PO, project close, commissioning certificate |
| Existence | Recorded assets physically exist and remain controlled | Physical verification, tag, title/lease document |
| Classification | Correct Part C class, component, CWIP/PPE and tangible/intangible split | Accounting memo, engineer report, project BOQ |
| Cut-off | Correct available-for-use and disposal dates | Trial-run records, acceptance note, sale invoice |
| Accuracy | Life, residual, method, shift and pro-rata calculation correct | FAR configuration, recomputation, shift logs |
| Presentation | Methods, departures and useful lives disclosed | Financial statements and Schedule III note |
Schedule XIV of the 1956 Act versus Schedule II
| Topic | Companies Act, 1956 - Schedule XIV | Companies Act, 2013 - Schedule II |
|---|---|---|
| Core basis | Minimum depreciation rates, generally separate SLM and WDV rates | Useful lives and residual-value framework |
| Management estimate | Rate-driven compliance dominated practice | Asset-specific life may differ with technical evidence and disclosure |
| Components | No comparable explicit Schedule-wide mandate | Mandatory for significant parts with different lives |
| Residual value | Embedded in rate framework | Ordinarily capped at 5% of original cost |
| Shift depreciation | Separate shift-rate mechanics | 50%/100% uplift for qualifying periods; NESD exclusions |
| Intangibles | Less integrated with modern standards | Generally follows Ind AS / AS, with special toll-road route |
| Transition | Rate change generally prospective through revised charge | Remaining carrying amount spread over remaining life; nil remaining life transition dealt with in Note 7 |
Application-led questions and model conclusions
Case A - factory campus
A company applies 30 years to its factory, office block, staff quarters and godown.
Conclusion: Wrong as a blanket approach. Note 1 excludes offices, godowns and staff quarters from “factory buildings”; classify each structure separately.
Case B - 24-hour label
A plant runs continuously in peak season, so management calls it a continuous process plant.
Conclusion: Operation alone is insufficient. It must be required and designed to operate 24 hours a day.
Case C - shift claim without logs
The company claims triple-shift depreciation for all production machinery based on factory operating hours.
Conclusion: Establish asset-specific use and NESD status. Factory-wide hours alone may not prove each asset worked triple shift.
Case D - fully depreciated assets
Many machines have nil carrying value but remain in regular use.
Conclusion: This is a risk indicator, not automatic proof of misstatement. Review estimates, components, residual values and FAR completeness prospectively.
Case E - technical report
A valuer certifies all machinery has an 8-year life without asset inspection.
Conclusion: Insufficient support. Advice must be asset-specific and based on design, usage, environment and maintenance evidence.
Case F - tax rate in books
The company uses Income-tax Act rates because they are easier.
Conclusion: Incorrect basis. Tax depreciation and Companies Act/accounting depreciation serve different purposes.
Quick answers professionals search for
Is 5% residual value mandatory?
No. It is an ordinary ceiling. A lower residual is permitted; a higher residual needs disclosure, justification and technical advice.
Does Schedule II prescribe WDV rates?
No. It prescribes useful lives. WDV rates are derived from life and residual value.
Can useful life differ from Part C?
Yes, with proper financial-statement disclosure and technical justification.
Does depreciation stop when a machine is idle?
Usually no. Under time-based methods it generally continues while the asset remains available for use.
What is NESD?
No extra shift depreciation. Base depreciation still applies.
When does depreciation start?
When the asset is available for use, not necessarily when first used or when production reaches capacity.
Are components optional?
No, material components with different useful lives must be separately depreciated.
Can a company use tax depreciation in its books?
Only if the resulting estimate independently complies with Schedule II and the accounting standards - mere tax convenience is not sufficient.
What follows Schedule II?
Schedule III, the financial-statement presentation and disclosure framework.
Is the calculator a filing tool?
No. It is an educational and working aid; material estimates require professional review and evidence.
Primary law and professional references
Primary statutory source
Companies Act, 2013, consolidated India Code text - Schedule II, including amendments reflected in the official footnotes.
India Code document: The Companies Act, 2013, Act 18 of 2013.
Accounting overlays
Applicable Companies (Indian Accounting Standards) Rules and Ind AS 16 / Ind AS 38 / Ind AS 105 / Ind AS 116, or the Companies (Accounting Standards) Rules and revised AS 10 / AS 26, as applicable.
Educational use only. This material does not replace the official statute, an applicable regulator's notification, the company's accounting framework, technical advice or professional judgement.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Business Case Studies & Corporate Strategy
- Official starting point
- www.mca.gov.in
Page source links
The prior page did not embed a page-specific external source. The category authority above is the minimum verification starting point; a specific instrument should be added when available.