What are Importants of Accumulated Depreciation ? and Define Accumulated Depreciation ?
Now a days , It is Showing Balance sheet of Company when filing IT Return of Co ?
Answers!
Accumulated Dep is total of depreciation for all years
Example
Computation of Dep @ 10% WDV
Particulars
Year 1
Year 2
Year 3
Asset
1000
900
810
Dep 10%
100
90
81
Net Amount
900
810
729
Presentation in Balance Sheet
Particulars
Year 1
Year 2
Year 3
Asset
1000
1000
1000
Accumulated Dep
100
190
271
Net Amount
900
810
729
In books we normally pass the entry
Depreciation Dr
To Assets
(Hence value of asset is reduced every year)
However for companies,following entry is passed
Depreciation Dr
To Accumulated Dep
(Value of asset is not reduced but instead Dep is added in Accumulated Dep A/c
(Accumulated Dep is shown in negative on fixed assets side of balance sheet)
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Answer the question...
Accumulated Dep is total of depreciation for all years
Example
Computation of Dep @ 10% WDV
| Particulars | Year 1 | Year 2 | Year 3 |
| Asset | 1000 | 900 | 810 |
| Dep 10% | 100 | 90 | 81 |
| Net Amount | 900 | 810 | 729 |
Presentation in Balance Sheet
| Particulars | Year 1 | Year 2 | Year 3 |
| Asset | 1000 | 1000 | 1000 |
| Accumulated Dep | 100 | 190 | 271 |
| Net Amount | 900 | 810 | 729 |
In books we normally pass the entry
Depreciation Dr
To Assets
(Hence value of asset is reduced every year)
However for companies,following entry is passed
Depreciation Dr
To Accumulated Dep
(Value of asset is not reduced but instead Dep is added in Accumulated Dep A/c
(Accumulated Dep is shown in negative on fixed assets side of balance sheet)
Learn more
Comment