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Depreciation
Accountancy
Why depreciation is not charged for stocks.
Answers (5)
Best Answer
Himanshu Somani
Stock/inventory is a current asset and depreciation is charged for an asset which is expected to be used for more than 1year and as per AS 2 inventory are held for not more than one year
Closing Inventories are valued at lower of cost or net realizable value - so if there is a reduction in their value that will get accounted for by this principle
Balamurali Unnithan M S
But, Assets used less than one, even one month, we can charge the depreciation? Himanshu.
a fixed asset is one that is expected to be used for more than a year - if 1 month is march and the rest of its life is in next few years - of course depreciation will be provided for march month alone - the last month of the financial year