Depreciation in Accounting

Each and every company have fixed assets in the form of Plant & Machinery, Computer, Furniture & Fixture, Vehicles etc.

This are basically long term type of assets used by the businesses and remain in the business for many years unless something happens like closure of business etc. due to which this are not required.

Its value deteriorate over a period of time due to its use i.e. wear and tear. Hence its value need to reduce year on year. This reduction in value of fixed assets is called as a ‘Depreciation’. This depreciation is charged to profit & loss account as expense.

Depreciation can be calculated by various methods . Most popular methods are Straight Line Method(SLM) and Written Down Value (WDV) Method. We will learn how to depreciation assets with this 2 methods and what are differences between these two methods.

In this series we will learn how to do accounting for depreciation , how to prepare Fixed Assets Ledger, Depreciation Ledger

Some times all the accounting for depreciation is carried through accumulated depreciation ledger. We will also learn how to prepare these ledgers through this series. We will also learn how to give accounting treatment when there is profit or loss on sale of fixed assets.