Institute of Professional Education and Research (IPER)

Report on
Depreciation Policy of TATA CONSULTANCY SERVICES LIMITED

SUBMITTED TO: SUBMITTED BY: PROF. ABHISHEK JAIN MALLVIYA RASHI GOUR NIKHIL

TATA CONSULTANCY SERVICES 2 |Page

RISHU PANDEY

SUMMARY
In respect of Capital Assets that are not in the ownership of the company, the company follows the policy of depreciating them over their useful life or in 2 years whichever is less. Thus all the assets that have been taken on lease will be depreciated completely in a maximum of 2 years. In respect of all other assets, the company follows a policy of providing for depreciation on a straight line basis at the rates mentioned in Schedule XIV of Companies Act 1956 or on the basis of estimated useful life of the asset whichever is higher. Freehold land is not depreciated, while leasehold land is amortized over the life of the lease. The policy of depreciating the Computer Equipments was 50% till March 31, 2013 which was reduced to 25% in the financial year 2012-2013. The company has not explicitly mentioned these changes in any of the applicable annual reports in Schedule Q. Thus the disclosures of policy changes are not clear. While Depreciation and amortisation expense 1079.92(in crore)(2013) 917.94(in crore)(2012),Its is clear that Depreciation and amortisation expense in 2013 is more then 2012

Fixed Assets Fixed assets are stated at cost, less accumulated depreciation/amortisation. Costs include all expenses incurred to bring the assets to its present location and condition. Fixed assets exclude computers and other assets individually costing ` 50,000 or less which are not capitalized except when they are part of a larger capital investment programme

TATA CONSULTANCY SERVICES 3 |Page

--In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available to realize such assets. In other situations, deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available to realize these assets

DEPRECIATION POLICY OF THE FY`13: SCHEDULE Q- NOTES TO ACCOUNTS: a) Depreciation: Depreciation other than on freehold land and capital work-in-progress is charged so as to write-off the cost of assets, on the following basis:

Type of asset Leasehold land and buildings Freehold buildings Factory buildings Leasehold improvements Plant and machinery Computer equipment Vehicles Office equipment Electrical installations Furniture and fixtures Intellectual property / distribution rights Rights under licensing agreement

Method Straight line Written down value Straight line Straight line Straight line Straight line Written down value Written down value Written down value Straight line Straight line Straight line

Rate / Period Lease period 5.00% 10.00% Lease period 33.33% 25.00% 25.89% 13.91% 13.91% 100% 24 60 months License period

TATA CONSULTANCY SERVICES 4 |Page

Fixed assets purchased for specific projects are depreciated over the period of the project.

Government grants Government grants are recognized when there is reasonable assurance that the Group will comply with the conditions attached to them and the grants will be received. Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognized as income over the life of a depreciable asset by way of a reduced depreciation charge. Other government grants are recognized as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic and rational basis.