Short Answer

Depreciation of common assets in society accounts is handled as per the provisions of the Gujarat Cooperative Societies Act, 1961 and the Gujarat Cooperative Societies Rules, 1965.

Detailed Explanation

Section 58 of the Gujarat Cooperative Societies Act, 1961 empowers the society to maintain proper accounts, including the provision for depreciation of assets. This means that societies must account for the decrease in value of common assets over time due to wear and tear or obsolescence. In practice, societies calculate depreciation based on the useful life of assets and allocate the corresponding amount in their financial statements to reflect the reduced value accurately.

Rule 86 of the Gujarat Cooperative Societies Rules, 1965 further elaborates on the procedure for calculating and accounting for depreciation. It mandates societies to follow the prescribed accounting standards while determining depreciation rates and methods. Societies need to maintain detailed records of asset values, depreciation calculations, and adjustments made in their books to ensure transparency and accuracy.

Practical Examples

• Scenario: A cooperative housing society owns a clubhouse that is used by all members. The society estimates the useful life of the clubhouse to be 20 years. As per Section 58 of the Act, the society calculates annual depreciation based on this useful life and records the depreciation expense in its financial statements.

• Scenario: A cooperative society operates a vehicle for common use by its members. Rule 86 of the Rules requires the society to follow the straight-line method to calculate depreciation on the vehicle's original cost over its expected useful life.

• Scenario: A cooperative society invests in common infrastructure like roads and street lighting. To comply with the Act and Rules, the society conducts periodic assessments to determine the decrease in the value of these assets and adjusts their book value accordingly.

Reference

• Section 58 of the Gujarat Cooperative Societies Act, 1961: Official PDF

• Rule 86 of the Gujarat Cooperative Societies Rules, 1965: Official PDF