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Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2013 My Business is Farashkhana & Decorator/ Mandap Keeper,

its a service, so how to calculate and show depreciation or loss of farashkhana items in P&L A/c

thanks..

CA Harish Suwalka

CA Harish Suwalka (Expert)
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25 May 2013 Depreciation can be claimed on capital goods used in provision of service according to the rates specified in shedule, while the losses and damages can directly be debited to the P & L A/c

Querist : Anonymous

Querist : Anonymous (Querist)

26 May 2013 can you give me the schedule ?

thanks for reply

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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20 July 2024 Certainly! When it comes to accounting for items used in your business of Farashkhana & Decorator/Mandap Keeper (which involves services rather than tangible goods), you typically wouldn't calculate depreciation in the traditional sense, as you would for physical assets like machinery or equipment. Instead, you might account for any loss or reduction in the value of items used in providing services as part of your Profit and Loss (P&L) statement.

### Accounting for Loss of Farashkhana Items

Since your business involves providing services such as decoration and mandap services, the items you use (like decorations, mandaps, furniture, etc.) are part of your operational expenses rather than capital assets subject to depreciation. Here’s how you can account for them:

1. **Expense Recognition**:
- **Direct Expenses**: Items used directly in providing services (e.g., decorative items, furniture for mandaps) are typically expensed in the period they are used or consumed.
- **Indirect Expenses**: If there are any expenses related to maintaining or storing these items (e.g., storage costs, maintenance), these should also be accounted for under indirect expenses.

2. **Loss or Write-off**:
- If any items become obsolete, damaged beyond repair, or lost during service delivery, you may write them off as a loss. This would be recorded as an expense in your P&L statement.
- For example, if a set of decorations or furniture is damaged and cannot be reused, you would record the cost of those items as a loss in your P&L statement.

3. **Recording in P&L Statement**:
- In your P&L statement, these expenses would typically appear under the relevant expense categories such as "Cost of Goods Sold" or "Operating Expenses."
- Ensure that all expenses related to the provision of services, including any losses on items used, are accurately recorded to reflect the true operating costs of your business.

### Example Entry:

Assuming you have a loss on damaged decorations:
```
Loss on Damaged Decorations [Debit]
To Decorations Inventory (or Loss Account) [Credit]
```

### Conclusion:

For your business of Farashkhana & Decorator/Mandap Keeper, focus on accurately recording the expenses related to items used in providing services. While depreciation is not applicable in the traditional sense, recognizing losses on items used or damaged is essential for reflecting the true financial performance of your business. Ensure to consult with your accountant or financial advisor to tailor these practices to your specific business needs and compliance requirements.

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