India - Unorganised Manufcture: NSS 51st Round, Schedule 2.2, July 1994 - June 1995

Assets are subject to diminution in working capacity or value with the passage of time. This gradual reduction in the value of an asset due to wear and tear as in the case of physical assets like building, machinery etc.is defined as depreciation.

The depreciation provided for the reference year is to be recorded in col.10. Where the enterprise was following a system of depreciation but provision has not been made for a number of years together, the estimate of the depreciation is to be made on
the basis of the system followed. If no depreciation has ever been allowed for an item of fixed asset, annual rate of depreciation may be estimated as (a) - (b), where (a) and (b) are as follows :

(a) purchase price + installation cost (or cost of construction)

(b) estimated working life in years.