on 02-24-2010 5:41 AM
When we carry out the depreciation posting,
we have an entry like
Dr 40 Accumulated Depreciation Account
Cr 50 Depreciation Account.
My q is..Here Dr entry 40 we are taking as Accumulated Depreciation...but it is a loss right ?
So..why we debit this account??
thanks
kris..
Hi
Check the GL assignments in AO90 or if there was a sale in this asset leading to a reversal
Thank You,
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hi,
As per the companies act the depreciation for the asset should be recorded in the accumulated depreciation account instead of directly crediting it to to the asset. The reason is depreciation is calculted on the APC. Hence at any point of time you get the apc separately and the dept till date separately.
CHEERS
Dear,
Accumulated Depreciation reports the amount of depreciation that has been taken from the time an asset was acquired until the date of the balance sheet. The cost of an asset minus its accumulated depreciation is the assetu2019s carry value or book value, instead, we show it in balance sheet as a single line called "Property, Plant, and Equipment - net" it is referring to the fact that the company has deducted accumulated depreciation from the purchase price of the company's assets.
Hi,
Depreciation A/c is a Profit & Loss A/c, which is charged against the profit every year.
Whereas Accumulated depreciation adds up depreciation for all the years, so as to report the total depreciation made on a particular asset till the given period. Using this we can report the asset using their historical prices and showing the current book value by deducting accumulated depreciation from the same.
As one of the Accounting principles states that Assets should be reported at their book values, so this makes it important to use accumulated depreciation account for reporting purpose.
Hope I am making a point.
Regards,
Abhishek
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Hi,
When we post depreciation the entries are as under:
40 Dr. Depreciation A/c
50 Cr. Accumulated Depreciation A/c
The depreciation A/c balance is then posted to Profit & Loss A/c, since the same is expense/loss.
The entry for that would be
40 Dr. Profit & Loss A/c
50 Cr. Depreciation A/c.
The balance of Accumulated depreciation A/c is shown as a deduction from Asset in the Asset side of Balance Sheet, since we report assets at their acquisition (or sometimes revalued) values.
In Balance it would be like:
Asset (Plant & Machinery) xxxx
Less: Accumulated Depreciation(P & M) xx
xxx
Hope this answers your question.
regards,
Abhishek
Edited by: abhishekt on Feb 24, 2010 11:31 AM
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