TV Depreciation Rate: How to Calculate, Formula, Examples

TVs are a part of everyday life, informing and entertaining. Like any asset, the cost of TVs depreciates over time too. Thus, knowing the TV depreciation rate will assist you in making knowledgeable financial decisions in regard to buying or selling your TV.

Throughout this article, we shall discuss various points concerning the rate of depreciation of TV, as well as the respective calculator method and illustrations.

What Is Depreciation?

Depreciation is applied for the exercise of writing off the cost of asset over its useful life. Depreciation is the reduction of profit and loss account of an entity with the usage of depreciable assets and the Income tax Act grants relief based on Written down Value (WDV) method.

But if the activity is involved in power generation or its generation and supply, it is possible to opt for the straight-line method.

TV Depreciation Rate

The depreciation rate indicates the degree to which an asset loses its value over a period of time. It typically is a percentage of the item's initial cost. The depreciation rate of a TV depends on several factors such as its type, brand, usage, and demand in the market. Overall, televisions have a useful life of between 5 to 10 years, after which their value decreases significantly.

Understanding the precise method of calculating depreciation can be helpful for tax and accounting purposes, particularly if you are thinking of reselling the item or simply maintaining a personal expense record. You can easily compute the value of your TV after a specific period.

LED TV Depreciation Rate

The Indian government charges depreciation on LED TVs at the rate of 40%. This can be claimed as a deduction on the profit and loss statement by the entities. 

Several factors influence this rate. Some of them are:

• Technological advancements

Rapid technological advancements in LED TV technology often lead to the out datedness of previous models, which causes their value to depreciate faster.

• Condition and maintenance

Properly maintained LED TVs tend to retain a higher value compared to those handled poorly.

• Market demand

The tastes of consumers and demand in the market shift very fast, making it a significant determinant in the depreciation rate.

Television Depreciation Rate as Per Companies Act

As per the Companies Act 2013, the depreciation rate applied on television and LED TVs (any end-user devices) is as follows:

• Useful life: 3 years
• Depreciation Rate (as per Straight Line Method): 31.67%
• Depreciation Rate (as per Written Down Value): 63.16%

Television Depreciation Rate as Per Income Tax Act

According to the Income Tax Act, the depreciation rate of 40% applies to television or LED TVs if all the requirements of Rule 5(2) are met.

You can determine the television depreciation rate according to the rate applicable under the Income Tax Act using two methods. They are:

• Straight Line Depreciation

Straight-line depreciation is useful in estimating the value of assets after depreciation because it theorizes that the value of the device declines evenly over its lifespan. Depreciation is estimated by subtracting the residual value from the original asset value and dividing the outcome by the approximated useful life

For example, suppose you purchase an LCD TV for Rs.2,02,500 with a useful life of 5 years and be recycled for Rs.14,000 at the end of 5 years. Here, the depreciable value is Rs.1,88,500 (2,02,500 - 14,000), and the annual depreciation amounts to Rs.37,700 (1,88,500 / 5).

Formula = Cost Of Asset – Residual Value /Useful Life 

• Written Down Value Depreciation

Written down value depreciation is a method used to calculate depreciation by considering the diminishing value of an asset. 

Formula: WDV * Depreciation Rate 

Example:

Value Of Sony TV: Rs 270000

Residual Value: Rs 21000

Life Span: 5 YRS 

Depreciation for First Year = Cost Of The Asset – Residual Value *0.40

                                            = 270000 – 21000 *0.40

                                             = Rs 99600

Depreciation for Second Year is calculated based on the reduced Value I.E (249000-21000-91200)_ = Rs 157800 as the TV Value Is Decreased.

Depreciation for the second Year = Cost Of the Asset – Residual Value – Depreciation for the first year * Depreciation Rate

                                                       = 270000- 21000-99600*0.40

                                                        = Rs 59760

Final Word

It is important that individuals and institutions understand TV rates of depreciation. You will be able to deal with your property effectively and make informed financial decisions if you can calculate depreciation. It is important for organizations also to be current with regard to the applicable depreciation rates, considering that an allowance for depreciation may be claimed. The Income Tax Act 1961 has outlined provisions regarding this form of an allowance for every real and intangible asset.