Depreciation entries - finalisation (Accounts)

This query is : Resolved

Student

( Author )
14 August 2010

Hi Expert,
Pls give an example of depreciation entry that is passed during finalisation?

thnx
kirti.

CMA. CS. Sanjay Gupta

( Expert )
14 August 2010

http://www.caclubindia.com/experts/depreciation-entries-finalisation-460115.asp

Already answered.

Aditya Maheshwari

( Expert )
14 August 2010

In case of inviduals & firm

Depreciation a/c Dr
To Asset A/c

Profit & Loss a/c Dr
To depreciation

Aditya Maheshwari

( Expert )
14 August 2010

In case of Companies

Depreciation a/c Dr
To proovision for depreciation A/c

Profit & Loss a/c Dr
To depreciation

CA. SANAT PYNE

( Expert )
14 August 2010

adityaji
if company is following this method
is it wrong?

Depreciation a/c Dr
To Asset A/c

Profit & Loss a/c Dr
To depreciation

Aditya Maheshwari

( Expert )
14 August 2010

As per Schedule VI under each head the original cost, and the additions thereto and deductions therefrom during the year, and total depreciation written off or provided up to the end of the year to be stated.

So if depreciation is credit to asset a/c then the same will not satify the requirement of Schedule VI as original cost will be reduced by the depreciation entry and hence the original cost of assets will not be known.

So we make provision for depreciation so that original cost is known to be disclosed in the balance sheet. The net effect of both the entries is same but the same is done for presentation purpose.

I hope it clears ur doubt.

CA. SANAT PYNE

( Expert )
14 August 2010

BUT WE ARE MAINTAINING FIXED ASSTES REGISTER FROM THAT WE CAN GET ORIGINAL COST OF ASSETS AND ADDITION THEREON

AND IN BALANCE SHEET WE ARE SHOWING AS PER Schedule VI .
BUT IN TALLY WE ARE FOLLWOING THE ABOVE PROCEDURE AND IN MY OPINION THERE IS NO HARM ON THAT. AND OUR AUDITOR IS ALSO GIVING SAME OPINION.

Aditya Maheshwari

( Expert )
14 August 2010

There is no harm in doing the same in tally.

However it will be only that the accounts in tally will not give the figure of gross block and depreciation seperately in the accounts itself. There will be difference in gross figures only and as i had said earlier also the net effect of both the entries is same but the same is done for presentation purpose.

No problem if this is being followed in books till the time in the final balance sheet the presentation requirement of schedule VI as given below is fulfilled:
(a) Gross block

(b) Less depreciation

(c) Net block

(d) Capital work-in-progress

CA. SANAT PYNE

( Expert )
14 August 2010

ok thanks

Student

( Author )
14 August 2010

thnx
In Tally, "provision for depreciation" should be grouped under which head?

CA. SANAT PYNE

( Expert )
14 August 2010

it will be under PROVISION.

Student

( Author )
14 August 2010

thank you Aditya & Sanat.....have thanked your messages too!!!!!!!!!!!