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Depreciation on overused machinery
Accountancy
depreciation is charged on a fixed assets on straight method say â?¹1 lac /year if the machine is overused during a year how it is recorded ??
Answers (9)
Best Answer
Aswin Chandar
Depreciation has nothing to do with how much you use that machine in a given year. As long as the scrap value and estimated life are the same under straight line method there will be no change in the amount of depreciation.
but if you overuse the machine in such a way that the expected life of the machine reduces, the new depreciation amount will be calculated using revised life and written down value of machine.
Thread Starter
Atharv SankliyaAlso if number of unit produce method of depreciation is used ?
Just use the formula and arrive at depreciation. Dep = (Depreciable amount x No of units produced during the period )/ total units expected
CA Suraj Lakhotia Admin
If it is overused, the useful life would be lesser and accordingly depreciation would be higher. Also you can use units of production method.
In which year the depreciation of overused machinery effect 1- year in which machinery is overused 2 - next year
Thread Starter
Atharv SankliyaIn which year the depreciation of overused machinery effect 1- year in which machinery is overused 2 - next year
Depreciation for all consecutive years starting from year in which machine is overused will be higher.
Aswin Chandar
Depreciation for all consecutive years starting from year in which machine is overused will be higher.
Will I learn/read about concept of depreciation in CA inter ???
Thread Starter
Atharv SankliyaWill I learn/read about concept of depreciation in CA inter ???
Yes it form basis for certain things you learn in Inter.
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