(1) Depreciation shall be charged on all fixed assets except for land, under the Straight line Method, in accordance with the rates of depreciation and useful life provided in Schedule VII to these rules.
(2) In case an asset is capitalized on or after October 1 of a financial year, depreciation shall be applicable at half the rates provided in the abovementioned schedule.
(3) In case an asset is sold or disposed of on or after October 1 of the financial year, full depreciation shall be provided. If it is sold or disposed off before October 1, depreciation shall be charged at half the prescribed rates. Entry for providing depreciation shall be passed at the time of accounting the sale or disposal of asset
(4) The depreciation of each asset shall be updated in the relevant fixed asset register every year in such a manner that the written down value of the assets as per accounts and as per the fixed asset register are in agreement.
(5) The Municipality may, if found necessary, maintain a separate Sinking Fund for the replacement of fixed assets, by transfer of amounts equivalent to the depreciation provision made for the year or a part thereof, to a separate bank account.
A Register of Sinking Fund for Asset Replacement in KMF NO 47 shall be maintained for this purpose.