Depreciation calculator
Written down value or straight line, year by year, with the half-year rule for an asset used less than 180 days.
Free, with no sign-up Worked out in your browser The working shown, line by line
The answer
| The asset | |
| Cost | 5,00,000.00 |
| Method | Written down value |
| Rate | 15% |
| Year by year | |
| Year 1 Opened at ₹5,00,000, charged ₹75,000 | 4,25,000.00 |
| Year 2 Opened at ₹4,25,000, charged ₹63,750 | 3,61,250.00 |
| Year 3 Opened at ₹3,61,250, charged ₹54,188 | 3,07,062.00 |
| Year 4 Opened at ₹3,07,062, charged ₹46,059 | 2,61,003.00 |
| Year 5 Opened at ₹2,61,003, charged ₹39,150 | 2,21,853.00 |
| Charged altogether | 2,78,147.00 |
| Written down value | 2,21,853.00 |
- Under the Income-tax Act depreciation is worked on the block of assets rather than on one asset, so this is the arithmetic rather than the return.
The Income-tax Act’s depreciation on written down value, and Schedule II to the Companies Act 2013.
How it is worked out
On written down value, each year’s charge is the rate applied to what is left of the asset at the start of that year, so the charge falls every year and never quite reaches nought. It is the method the Income-tax Act uses, on each block of assets.
On straight line, each year’s charge is the rate applied to the cost less the residual value, the same every year until the asset is written down to its residual value. The Companies Act allows it, with the rate following from the useful life in Schedule II.
An asset put to use for less than 180 days in the year of purchase gets only half the year’s depreciation under the Income-tax Act in that first year. The half not taken is not claimed later.
Worked example: Machinery costing ₹5 lakh, written down at 15%
The first year’s depreciation is ₹75,000, and after five years the written down value is a little over ₹2.2 lakh.
Questions
What is the difference between WDV and SLM?
Written down value applies the rate to the reducing value each year, so the charge is highest at the start. Straight line applies the rate to the cost each year, so the charge is the same every year. The Income-tax Act uses written down value; companies commonly use straight line in their books.
What is the half-year rule?
Under the Income-tax Act, an asset acquired and put to use for less than 180 days in the year gets depreciation at half the rate in that year. Turn on the switch to see it.
Where do the Companies Act rates come from?
Schedule II to the Companies Act 2013 prescribes useful lives rather than rates. The straight line rate follows from the useful life and the residual value, usually taken at five per cent of cost.
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