Comments to answers

Hi CPAs when preparing the PPE theoretical, ehe, in class we were given the rates but in practice do we apply Capital Allowances rates provide by KRA?

Depreciation:
PPE is an ACRONOMY for Property Plant & Equipment schedule in ACCOUNTING that summarises and calculates depreciation movement from one year to the next.Audited accounts usually have a page dedicated to PPE.

TAX Depreciation:
Second, accounting depreciation as presented by a PPE schedule is not used for tax purposes. A separate analysis refereed to as a WEAR & TEAR SCHEDULE is what is used to arrive at the tax depreciation.

Depreciation RATES:
As CPA Vincent has mentioned the rates used for a PPE are usually STANDARD, however, a company policy may VARY this as long as it reflects the REALITY of the business and CONSISTENTLY applied.

Wear & Tear RATES:
These are provided by s.15(2b) of The Income Tax Act(Cap 470) which refers to rates contained in the SECOND SCHEDULE of the same Act.

Depreciation Rates
Finally in most circumstances the Accounting & Tax rates are similar except that the method for calculating tax depreciation is mainly on a REDUCING BALANCE basis. The annual accounting depreciation rates are as follows:

Straight line

• Land 0%
• buildings 4%
• Motor Vehicle 25%
• fixtures & fittings 12.5%
• Plant & Equipment 12.5%

Reducing balance

• Computers 30%

Hi CPAs still on the depreciation when you say they are standard what does this imply and what are the standardised rate for depreciation on buildings,fixtures,chairs and desks please help.