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Provision for depreciation

If there is any balance in provision for depreciation account Do we deduct such depreciation along with current year depreciation from asset bal while preparing balance sheet


Sai Teja

Sai Teja

CA Foundation

12K+

25-Mar-21 16:13

38

Answers (11)

Best Answer

Sai bro, suppose if there is 10,000 in provision for depreciation A/C . In the next year we incurred 15,000 depreciation , now we have to deduct that extra 5000 (which is difference b/w last year provision and present depreciation) from asset.


Meda Jeevansai

Meda Jeevansai

CA Foundation

11K+

25-Mar-21 17:20

Provision for depreciation will always have a credit balance. You deduct the provision from book value of assets.


Suraj Lakhotia

Suraj Lakhotia

Admin

25-Mar-21 16:15

Provision for depreciation will always have a credit balance. You deduct the provision from book value of assets.

After deducting what will the value of provision for depreciation balance for next year. Will it be zero??


Sai Teja

Sai Teja

CA Foundation

12K+

25-Mar-21 16:24

After deducting what will the value of provision for depreciation balance for next year. Will it be zero??

Balance remains in independent accounts. We suggest you watch the accounting for depreciation course (Under CA Foundation) which is available for free currently. Also this aspect is covered in depth in preparation of financial statement chapter under Paper 1 - Accounting for CA Inter (in which you are enrolled)


Suraj Lakhotia

Suraj Lakhotia

Admin

25-Mar-21 16:29

Thank you so much

You're welcome Anna :)


Meda Jeevansai

Meda Jeevansai

CA Foundation

11K+

25-Mar-21 20:39

Sorry to say, this is not correct. As suggested above, please refer the videos. Thanks

Oh!ok Sir can you please explain it in a one or two sentences


Sai Teja

Sai Teja

CA Foundation

12K+

25-Mar-21 20:54

Sorry to say, this is not correct. As suggested above, please refer the videos. Thanks

Oh ok sir. Thanks for informing.


Meda Jeevansai

Meda Jeevansai

CA Foundation

11K+

25-Mar-21 20:57

Oh!ok Sir can you please explain it in a one or two sentences

At time of purchase: Asset value - â?¹1Lakh, Estimated useful life â?? 10 years, Estimated residual value â?? Nil. So, depreciation each year will be â?¹10,000. Let us say accounting is done using Accumulated depreciation method. At end of year 1 P&L â?? Depreciation: â?¹10,000 Balance Sheet â?? Asset (â?¹1 lakh) â?? accumulated depreciation (â?¹10,000) = â?¹90,000 At end of year 2 P&L â?? Depreciation: â?¹10,000 Balance Sheet â?? Asset (â?¹1 lakh) â?? accumulated depreciation (â?¹20,000) = â?¹80,000 At end of year 3 P&L â?? Depreciation: â?¹10,000 Balance Sheet â?? Asset (â?¹1 lakh) â?? accumulated depreciation (â?¹30,000) = â?¹70,000 And so on. Watch videos for more clarity! Happy studying


Sahibdeep Singh

Sahibdeep Singh

Moderator

26-Mar-21 10:56

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