Dear Sir,
It is advisable to take a phone consultation for detail discussion.
Depreciation
Sir A contractor has constructed a storage shed in our land for executing his work in 2008. Now his work has been completed and as the storage shed is in good condition, has foundation, structural steel, walls, a crane can also get into the shed to place storage materials. So we are planning to take it.we have considered useful life of it as 50years and by double depreciation method depreciation is 4%.how can i justify audit for considering useful life as 50yrs as company act says temporary structure useful life is 3years.though the structure is constructed temporarily but it is actong like a building consisting of structural steel columns.pls give us the points to justify our point
Asked 4 years ago in Audit
Hello,
Please refer guidance note in this regard, GN (A) 35 guidance note on Accounting for Depreciation in companies.
I hope that this answer satisfies your requirement.
Regards,
CA Hunny Badlani
- For audit purpose, you need to take the report of expert to justify its useful life of 50 years. In my opinion it is not justified because this structure is on a piece of land. Also, useful life of factory building is 30 years then how can a temporary structure would be of 50 years.
- On what basis, you are saying its useful life is 50 years.
Hi
I hope the query is resolved in similar question posted by you. We have already answered this question.
If your useful life is not in line with useful life of Companies Act you need to get it certified with a valuer and based on that report you can take useful life as 50 years without this you need to take the useful life as provided by companies act.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
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