Reg: Depreciation on SFF/MCC

Please refer to our HO DEV. Circular No. 12/2007 dated 02/03/2007 containing instructions for finalization of accounts for the year ending 31.03.2007. The detailed guidelines for depreciation on SFF items is as under:

1. Depreciation on SFF/MCC is chargeable annually in March every year on Straight Line Method. The depreciation is to be calculated on original Purchase Value of the assets.

2. Depreciation should be charged for the full year on all assets existing in the books of accounts at the close of previous year.

However depreciation on additions to assets is to be provided from the month of its purchase and in case of assets sold/disposed off during the year, depreciation up to previous month is to be provided.

3. Depreciation is to be charged at the branch/office where the asset is capitalized, irrespective of its physical location.

4. The rates prescribed for charging depreciation in respect of Assets are as under:

i) Steel articles 05% per annuam

ii) Wooden Articles 10% per annuam

iii) Machinery, Electrical & Misc. articles 15% per annuam

iv) Computer & Related Items 33.33% per annuam

v) MCC 15% per annuam

5. Total of depreciation provided during the year and depreciation on account of previous year’s MOC (Memorandum of changes), if any should match with of profit and Loss Statement.

6. A nominal amount of Rs. 1/- per item must remain in the books as ‘Book Value’ till the item is written off/disposed off e.g. if book value is Rs.20/- and depreciation works out to be Rs.125/- then you will charge only Rs.19/- as depreciation so that book value comes to Rs. 1/- only.

7. The amount of depreciation charged will be credited to SFF (item wise) account to debit of ‘Exp- depreciation on SFF a/c.

The statement should be prepared on the prescribed performa, which is to be supplied by HO along with the other half yearly performa.

General Manager