Provision for depreciation

CA Suraj Lakhotia Admin

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

Thread Starter

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

Meda Jeevansai

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.

Thread Starter

Thank you so much

Meda Jeevansai

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.

Sahibdeep Singh

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

Sahibdeep Singh

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

Thread Starter

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

Sahibdeep Singh

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