Accounting for depreciation by Indian corporates is governed by the provision of Section 123 read with Schedule II of the Companies Act, 2013 and accounting standards, AS 6 and AS 10. To provide a practical guidance on accounting for depreciation (Schedule II) to preparers and auditors of the financial statements, the Institute of Chartered Accountants of India (ICAI) has released a guidance note on the same. Major guidance provided by the guidance note are as follows:
(i) Depreciation should be charged on the basis of useful life. Useful life is specified in the Schedule II, but an entity may use different useful life subject to certain disclosures.