Administration Manual - B.E.S.T. Undertaking.

financing reduces the external borrowing as well as Interest charges. It
is therefore a legitimate cost of operation. The interest on internal funds
is allocated between the Supply & Transport division on the basis of 50:50
upto 2003-04. However from the financial year 2004-05, it has been
decided to charge interest on internal funds on the basis of asset of
respective division utilized in the business of the Undertaking. Detail
working sheet for calculation of interest on Internal Fund is given in
Appendix –V.
x) Provision for Depreciation:
The method of calculating the Depreciation is as under –
1) The depreciation is worked out on straight line method
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2) Life of the assets as provided in the Income Tax Act is generally
adopted for working out the depreciation on the assets pertaining to the
Administration/ Transport Division of the Undertaking. In case of Electric
Supply division, life of the asset provided as per Electricity (Supply) Act,
1948 is generally adopted for working out the depreciation on the assets.
3) The depreciation is provided from the year in which the asset is
acquired.
4) Depreciation is provided on the acquisition/purchase cost of the
assets after taking into consideration the residual value of the assets,
which is estimated at 10 % of the acquisition/purchase cost.
Accordingly Depreciation provision is calculated for each division on
the Addition of assets by crediting Depreciation Fund Account and debiting
to three divisions i.e. General Administration, Supply and Buses.
Depreciation provision for the assets which are already in existence i.e.
opening balance of asset under the each division is made by debiting to
the each division accounts head and crediting to the provision for
Depreciation Fund Account. Detail rates of Depreciation fund is created
vide BCR No. 470 dated 13/9/1968
5) The depreciation rate adopted for different type of assets are
given in Appendix No. VI.
(xi) Additional Deprecation: