Capex invoice OCR + Schedule II useful-life validation + SLM/WDV depreciation — fixed asset register automation in under 30 seconds per batch.
| Asset Code | Description | Class | Cap Date | Gross Block | Life (yrs) | Method | Residual |
|---|---|---|---|---|---|---|---|
| FA-2026-1001 | Dell PowerEdge R760 Server | Computers — Servers | 01-Apr-26 | ₹4,95,000 | 6 | WDV | ₹24,750 |
| FA-2026-1021 | Modular Workstation Set | Furniture & Fixtures | 15-Apr-26 | ₹1,82,000 | 6 ⚠ | SLM | ₹9,100 |
For a mid-market company running 50–500 fixed assets, fixed asset register automation can replace a two-day quarterly chore with a 30-second workflow — but only if the tool understands the three-way intersection of Ind AS 16, Companies Act Schedule II, and the CGST Act.
A controller maintaining a 200-asset register must extract the capitalisable cost from every capex invoice, strip recoverable GST, add freight and installation, cross-check each total against the FAR gross block, then hand-calculate SLM or WDV depreciation asset by asset. At 50 assets that is a two-day task; at 300 it consumes a full week and is rarely done before the close deadline.
Schedule II Part C prescribes exact useful lives: 3 years for end-user computers, 6 for servers, 10 for furniture, 15 for general plant and machinery. In practice these look-ups are done from memory or an outdated internal policy sheet. An asset booked at 5 years for Furniture & Fixtures (Schedule II: 10 years) overstates annual SLM depreciation by 100% for the first five years, producing a completely incorrect net block.
GST at 18% on capital goods is largely recoverable as Input Tax Credit under Section 16 of the CGST Act 2017 for registered entities and must be excluded from the capitalisable cost. Freight and installation, by contrast, are capitalised under Ind AS 16, Para 16. A controller copying the invoice total directly into the FAR inflates gross block by the full GST amount — on a ₹5,84,100 invoice, that is ₹89,100 of overstatement that inflates every depreciation charge for the full useful life.
Under Schedule III of the Companies Act 2013, gross block, accumulated depreciation, and net block must be disclosed asset-class-wise in the notes to the financial statements. If the underlying FAR carries useful-life or gross-block errors, the disclosures are wrong. Restating them after the board approves the financials requires a board resolution and a potential RoC filing — a disproportionate cost for a preventable data-entry error.
The gross-block overstatement on a single ₹5,84,100 capex invoice when 18% GST is not stripped out before capitalisation — an error that persists across every depreciation computation for the full useful life of the asset. Multiplied across a 200-asset FAR with a mix of recoverable and blocked ITC, the aggregate overstatement can exceed ₹15–20 lakhs on a mid-market capex register, triggering a material misstatement finding under SA 320 (Materiality in Planning and Performing an Audit).
India's fixed-asset accounting framework sits at the intersection of three bodies of rules. Missing one — especially the GST stripping step or the Schedule II useful-life table — cascades into incorrect depreciation charges for every period across the asset's entire useful life.
Schedule II Part C lists the mandatory useful life for every asset class under the Straight Line Method: 3 years for Computers (end-user devices), 6 years for Servers & Networks, 10 years for Furniture & Fittings, 15 years for general Plant & Machinery, 30 years for Buildings. A company may apply a shorter or longer life only if it can justify the departure; any deviation without written justification is non-compliant and creates a qualification risk in the statutory audit.
Section 123(2) of the Companies Act 2013 requires that depreciation is provided in the manner specified in Schedule II before any dividend can be declared out of free reserves or current profits. An incorrect FAR is therefore not merely an accounting error — it is a compliance exposure that can void a dividend declaration if the auditors qualify the depreciation charge after the board has approved the distribution.
Ind AS 16, paragraphs 10–22, defines the cost of a tangible asset as its purchase price less any trade discounts plus all directly attributable costs to bring the asset to its working condition — including freight, installation, and testing. Recoverable input taxes are excluded from cost. This is the source of the capitalisable-cost formula the workflow enforces: base cost plus freight/installation minus recoverable GST ITC.
Section 16 of the CGST Act 2017 permits input tax credit on capital goods for registered entities, excluding the GST from the capitalisable cost. Section 17(5) lists blocked-credit categories where ITC is not available — motor vehicles used for personal purposes, food and beverages, and certain others. For a blocked-credit asset, the full GST is part of the capitalisable cost and must be included in gross block. The workflow extracts the asset class and applies the correct treatment automatically.
For controllers managing a quarterly capex cycle across manufacturing plant, IT hardware, furniture, and vehicles — each with a different Schedule II life, a different ITC eligibility, and a different depreciation method — maintaining a clean FAR manually is an institutional-knowledge problem, not just a data-entry problem. The knowledge leaves when the controller does.
Seven deterministic passes from a capex invoice PDF and FAR extract to a validated depreciation schedule — in under 30 seconds per asset batch. Every step produces a structured output every controller can trace back to the source invoice and the Schedule II table line by line.
Cadel ingests the multi-page capex invoice PDF (one capital-asset invoice per page) and extracts vendor name, invoice number, invoice date, asset description, asset class, base cost, freight and installation charges, recoverable GST, and invoice total. For example: invoice CAP/2026/4101 (Acme Infotech Systems Ltd, Dell PowerEdge R760 server) and CAP/2026/4108 (Acme Machine Tools Pvt Ltd, CNC milling machine), each matched to the FAR row on Asset Code and Invoice No.
The workflow computes capitalisable cost as base cost + freight/installation − recoverable GST ITC, consistent with Ind AS 16, Para 16 and Section 16 of the CGST Act 2017. For the Dell PowerEdge R760 demo asset: ₹4,80,000 base + ₹15,000 freight − ₹0 recoverable GST = ₹4,95,000 capitalisable cost. For Section 17(5) blocked-credit assets (e.g. certain motor vehicles), the workflow includes GST in cost automatically based on the asset class.
The derived capitalisable cost is compared against the gross block recorded in the FAR extract. Any difference flags an exception with the rupee delta. For the CNC Lathe Machine edge case: FAR gross block ₹5,20,000 vs. invoice capitalisable cost ₹4,95,000 produces a ₹25,000 overstatement alert with status set to Pending Review, blocking the depreciation computation until resolved.
The asset class extracted from the invoice is matched against Cadel's embedded Schedule II Part C look-up table. The FAR useful life is checked against the prescribed life: 3 years for end-user computers, 6 years for servers and networks, 10 years for furniture and fittings, 15 years for general plant and machinery. A mismatch — such as Furniture booked at 6 years against a prescribed 10 years — raises a blocking exception before the depreciation run.
Residual value on the FAR is validated as ≤ 5% of gross block, per Schedule II Part A. For the clean baseline: ₹24,750 ÷ ₹4,95,000 = 5.00% — passes exactly. Any entry exceeding the ceiling is flagged with the permissible maximum in rupees and the asset is blocked from the depreciation run until the residual value is corrected in the FAR.
The capitalization date is confirmed to be ≤ today's system date — a future date produces negative or incorrect pro-rata YTD depreciation and is blocked before computation begins. The depreciation method field is validated as either SLM or WDV; any other value (blank, WDV2, legacy codes) is surfaced as a blocking exception.
For assets passing all validations, the workflow calculates YTD depreciation and net block using the method specified in the FAR, applying day-accurate pro-rata for the first year. Under SLM: annual charge = (Gross Block − Residual Value) ÷ Useful Life. Under WDV: rate = 1 − (Residual / Gross)^(1/Life), applied to opening net block. The complete depreciation schedule — gross block, period charge, accumulated depreciation, net block — is written to the FAR export as an Excel download.
The workflow ships with a battery of synthetic test scenarios that exercise every failure mode seen in real-world capex registers. Each produces a deterministic outcome an auditor or controller can verify in seconds.
Three seeded documents — a 59-row Fixed Asset Register, a multi-page capex invoice PDF, and an optional depreciation policy PDF — each engineered so the full exception taxonomy has something to surface.
One consolidated Fixed Asset Register with asset code, description, class, capitalization date, gross block, useful life, depreciation method, and residual value. The target document the workflow validates and reconciles against the invoices.
The source of truth: each invoice page shows base cost, freight/installation, recoverable GST, and the capitalisable total. Most pages reconcile to the FAR row; a handful expose the planted breaks — gross-block mismatch, invoice with no register row, and register row with no invoice.
The company's board-approved policy stating Schedule II useful lives, the 5% residual cap, the gross-block derivation formula, and the SLM vs WDV choice by asset class. Used as an optional cross-validation reference — the workflow runs without it but uses it to flag any FAR entries that contradict management's own documented policy.
Each exception row records asset code, exception type, source figure, expected figure, and delta in rupees. A useful-life mismatch on the Furniture & Fixtures asset booked at 6 years instead of 10 would, left uncorrected, overstate the annual SLM depreciation charge by 67% and accumulate a material overstatement over the asset's life.
For a mid-market finance team processing a quarterly capex batch of 50–300 assets, the manual FAR close — invoice review, GST stripping, Schedule II look-up, gross-block cross-check, and depreciation calculation — typically consumes 45–90 minutes per asset batch. The workflow compresses that to under 30 seconds, with zero manual formula entry in Excel and a complete audit trail that drops directly into the statutory audit file.
Capitalisable cost is derived algorithmically from invoice fields — base cost plus freight, less recoverable GST under CGST Act Section 16 — rather than copied from the invoice total. The most common source of FAR misstatement in mid-market companies (copying the GST-inclusive total) is eliminated entirely for every asset the workflow processes.
The embedded Schedule II Part C look-up table eliminates the institutional-knowledge dependency. Useful-life validation runs across every FAR row on every batch — not just the assets a controller happens to check. Mismatches are blocked before the depreciation run, preventing the compounding overstatement that a one-off manual error would otherwise carry for the full asset life.
The validated FAR extract, period-by-period depreciation schedule, and exceptions log with before/after values — all exported as a dated Excel file — satisfy the evidentiary requirements of ICAI SA 501 (physical-verification support) and give the statutory auditor a clear trail from the source invoice to the depreciation charge in the trial balance without a separate reconciliation exercise.
The questions accountants and finance controllers ask most often before deploying fixed asset register automation.
Upload two files: the Fixed Asset Register (far_entry_register.xlsx) and the capital-asset tax invoices (capex_invoices.pdf, one invoice per page). The depreciation policy PDF is optional supporting reference. Cadel classifies each file automatically, so you can drop them together.
The workflow enforces depreciation rules under Schedule II to the Companies Act 2013, which specifies prescribed useful lives for each asset class (Part A general principles, Part C asset-class table). It validates that the useful life entered in the FAR matches the Schedule II life for the declared asset class, and that residual value does not exceed 5% of original cost — both conditions required for a compliant depreciation charge under Section 123 read with Schedule II.
The capitalisable cost is base cost plus directly attributable expenditure (freight, installation, testing) minus recoverable input tax credit (ITC) on capital goods as permitted under Section 16 and Section 17(5) of the CGST Act 2017. If the entity is eligible to claim ITC on the capital asset, the GST component is excluded from gross block; if ITC is blocked (e.g., motor vehicles under Section 17(5)(a)), the GST is included in cost. The workflow extracts all three components from the invoice and applies the correct capitalisable-cost formula based on the asset class.
Yes. The FAR accepts a per-asset depreciation_method field set to either SLM (Straight Line Method) or WDV (Written Down Value). Under SLM, annual depreciation equals (Gross Block − Residual Value) ÷ Useful Life. Under WDV, the depreciation rate is derived from the Schedule II formula 1 − (Residual Value / Gross Block)^(1/Useful Life) and applied to the opening net block each year. YTD depreciation is pro-rated from the capitalization date to the reporting date. Any method other than SLM or WDV is surfaced as a blocking exception.
The workflow's cost-accumulation logic — capitalizing directly attributable costs and excluding recoverable taxes — aligns with Ind AS 16, paragraphs 10–22. Useful-life review and component accounting are supported through the FAR's per-asset fields. For statutory reporting under the Companies Act, depreciation is computed on Schedule II lives; for Ind AS financial statements, the workflow allows override of useful life and residual value to reflect management estimates as required by Ind AS 16.50–16.51. This also aligns with the parallel treatment under IFRS 16 for entities reporting under International Financial Reporting Standards.
The workflow exports a structured Excel FAR with YTD depreciation and net block columns, which can be imported directly into Tally Prime's Fixed Asset master or used as a journal entry upload file for SAP (FB50) or NetSuite (Journal Entry CSV import). The export includes debit/credit columns pre-populated for the Depreciation Expense and Accumulated Depreciation accounts specified in the company's chart of accounts.
Every FAR entry records the source invoice filename, extraction timestamp, validation pass/fail results, and the user who approved or overrode an exception. The exceptions inbox retains all flagged items with their original extracted values alongside the corrected values, creating a before/after log. This log satisfies the documentation requirements under ICAI SA 500 (Audit Evidence) and supports an auditor's verification that each asset's cost, life, and method have been reviewed against Schedule II prior to inclusion in the depreciation run.
Every FAR row is reconciled to its supporting capex invoice on Asset Code and Invoice No. Anything that fails a check is surfaced in the Exceptions view with the specific rule that tripped — gross-block mismatch, useful-life mismatch, residual above the 5% cap, a future capitalization date, an invalid depreciation method, a register row with no supporting invoice, or an invoice with no register row. Each exception shows the source figure, the expected figure, and the delta in rupees so the controller can remediate without switching back to the source documents.
