Accumulated depreciation

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Prince (Querist)

07 April 2012 Can you tell me the accounting treatment of accumulated depreciation and also what is the treatment when a asset is sold where asset account and accumulated depreciation account is separately maintained.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)

08 April 2012 When a company has assets such as buildings, furniture and equipment, they are expensed over a number of accounting periods using depreciation. Depreciation is when an asset decreases in value due to wear and tear and deterioration. At the end of any given accounting period, all of the depreciation that has been expensed is the accumulated depreciation. When you subtract accumulated depreciation from an asset, you come up with the net book value of the asset

In the books you provide depreciation and the final result is either Profit or Loss. The un-absorbed depreciation appears with the Income Tax Department when there is a loss return then there are two parts one is business loss and the other is depreciation loss. When the loss is set off against profit and the profit is unable to absorb depreciation or the depreciation cannot be set off then the same is un-absorbed depreciation and there is no accoiunting treatment for this.

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Prince

Prince (Querist)

08 April 2012 suppose an asset and let it be furniture valued at rs 15000 and accumulated depreciation 3000 thereon and is sold at rs 13000 at year end and current year depreciation is rs 1500. pls give accounting entries.

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