Clause 3(iv) of Part II to Schedule VI to Companies Act, 1956 provides that the Profit and Loss Account must disclose the amount of depreciation, renewals or diminution in value of the fixed assets. If such a provision is not made by means of a depreciation charge, the method adopted for making such a provision should be disclosed. If no provision has been made for depreciation in respect of a particular asset, the fact that no provision has been made should be stated and the quantum of arrears of depreciation computed in accordance with Section 205(2) should be disclosed by way of a note. The form of the Balance Sheet prescribed under the Part I of Schedule VI to Companies Act, 1956, further requires that total depreciation written off or provided in respect of each asset should be disclosed. Accounting Standard 6 requires following information to be disclosed in the financial statements;
- the historical cost or other amount substituted for historical cost of each class of depreciable assets;
- total depreciation for the period for each class of assets; and
- the related accumulated depreciation.
It also requires following disclosure of information in the financial statements alongwith the disclosure of other accounting policies;
- depreciation method used; and
- depreciation rates or the useful lives of the assets, if they are different from the principal rates specified in the statute governing the enterprise.