In depreciation entries how many accounts are maintained

Best of luck! Save my name, email, and website in this browser for the next time I comment. Provision for Depreciation Account. Its really reliable asseble I enjoyed it Reply. I really found this very helpful … Reply. Thanks Reply. Thank you Reply. Its really great.

It was helpful to me and the concepts are clearly written. I will visit this site again. I like yr way of answering. Thank you so much it is precis and understandable Reply. Its helpful…. Good articulation and was so helpful.. It does not directly credit the cost of the respective asset because, as per the requirement of the accounting standards, companies require to show the cost as well as the related accumulated depreciation of the fixed asset in the financial statements of the company Financial Statements Of The Company Financial statements are written reports prepared by a company's management to present the company's financial affairs over a given period quarter, six monthly or yearly.

These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels. To record such depreciation on the fixed assets in the books of accounts of the company, depreciation expenses account is debited, and the accumulated depreciation account is credited.

The entry to record accumulated depreciation is as below:. Now, when the company sells or disposes of the asset, then this balance of the accumulated depreciation account Depreciation Account Depreciation is a method of accounting for the costs of any physical or tangible asset over the course of its useful life.

Its value indicates how much of an asset's worth has been used. The entry to record the same is as follows:. There is a company, A ltd having the plant and machinery. During the year, no purchases and sales were made by the company concerning its plant and machinery.

Using the straight-line method Straight-line Method Straight Line Depreciation Method is one of the most popular methods of depreciation where the asset uniformly depreciates over its useful life and the cost of the asset is evenly spread over its useful and functional life.

In the year there were no purchases and sales were made by the company concerning its plant and machinery, so no adjustments are required to be made. At the end of the accounting year entry to record the depreciation and accumulated depreciation is as follows:. Sign In For the sake of quality, our forum is currently "Restricted" to invitation-only. Remember Me! Don't have account, Sign Up Here. Forgot Password. You must login to ask question. Journal Entry for Depreciation Reduction in the value of tangible fixed assets due to normal usage, wear and tear, new technology or unfavourable market conditions is called Depreciation.

Question 1. Answer 1. Wrong The asset account is credited for such an entry. Question 2. Answer 2. Correct Great! Question 3. Answer 3. Question 4.