Changes in Asset Accounting for Indian Companies Act 2013

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Changes in Asset Accounting for

Indian Companies Act 2013

created by Malhar Jain on Jun 5, 2014 11:28 AM, last modified by Nathan Genez on Jun 5, 2014 2:36 PMVersion 2inShare1

Below is the changes that will be taking place in the system due to changes in Company's Act 2013

incorporation:

1.) If life of the asset has decreased:- e.g. there is asset for which original life is 10 years, 3 years already

completed as on 31st March 2014 and now life has decreased to 7 years. In this scenario, WDV as on

31st March 2014 should be depreciation over the period of 4 years instead of 7 years. How to carry out this

change

1. A New Depreciation key would be created which will calculate the depreciation on the remaining useful life of

assets as maintained in the Asset Master.

2. For the New Assets, no changes are required but for Existing Assets, the changes in the Asset Master is required to

be done in the Useful Life of Asset as well as in the Depreciation Key of the Asset. This changes will be done bythe User's.

2.) If life of the asset has increased:- e.g. there is asset for which original life is 10 years, 3 years already

completed as on 31st

March 2014 and now life has decreased to 12 years. In this scenario, WDV as on 31st

March

2014 should be depreciation over the period of 9 years instead of 7 years. How to carry out this change

3. This will be catered in the same way as is done for the above point (1.)

3.) If the life of the asset is already over after change in rates:- e.g. there is asset for which original life is 10

years, 7 years already completed as on 31st

March 2014 and now life has decreased to 6 years. In this scenario,

WDV as on 31st

March 2014 should be charged to the opening reserve. How to carry out this change

4. In this case an entry is to be posted in the system by User, for which the GL's needs to be provided by the business.

Below shows the detailed example for the above mentioned points.

1. If the Life of asset has decreased:

Asset No. : 211000112

Depre key – ZS15 – which is depreciating the Asset on Useful Life basis.

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The planned values for depreciation posting is as below for Fiscal year 2015 :







Now changing the useful life of assets from 4 years to 3 years. So now the Asset will be write off in 3 years as shown below:

The Comparison tab is as below:




Depreciation planned values for the year 2015 is as follows:







From above we can see that depreciation per period has changed from 415.63 to 581.88 due to change in useful life of assets.

2. If the Life of asset has increased:

Asset No. : 211000113

Depre key – ZS15







Now changing the useful life of assets from 4 years to 5 years. So now the Asset will get written off in 5 years as shown below:







From above we can see that depreciation per period has changed from 1607.81 to 1250.52 due to change in useful life of assets.

3. If the life of the asset is already over after change in rates:

Asset No. : 211000038Depre key – ZS15




Now changing the useful life of assets from 4 years to 1 years. But here already the expired useful life is of 2 years, whereasaccording to Company's Act, 2013 the useful life of Asset should be 1 year only.









From above we can see that depreciation per period has changed from 3750.66 to 0 due to change in useful life of assets. And theremaining NBV of the Asset of 86265.40 will be removed by executing T-Code ABAA for this Asset as shown below:







Then press enter. After this on next screen enter the NBV of the Asset i.e. 86,265.40

After this save the Document as below:







We can check in the Asset Explorer that the above document is posted and the NBV of the Asset is 'Nil'







Here the Document is posted in AA only and not in FI. The unplanned Depreciation entry will get posted in FI when

Depreciation Run is executed for this period through T-Code – AFAB as below:

After this Execute the same :

From above we can see that this entry will be getting posted in the system. The accounting entry for the same is :







This is the testing GL that we have used in posting key 40, that would be the Reserve GL that would be provided by the Client.After this the entry will be posted in the FI and by AA and FI will be in synchronization.

Kindly revert if any additions or changes or suggestions for the above document.

Regards,

Malhar.


Changes in Asset Accounting for Indian Companies Act 2013

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