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Depreciation

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madhu Reddy

madhu Reddy

(Querist)
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15 May 2013 Dear sir,

Why can't we show Depreciation under Direct expenses i.e Depreciation on Factory Building , Depreciation on plant and Machinery

Why we will show under Indirect exp?

Please Clarify

Aditya KHaitan

Aditya KHaitan (Expert)
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16 May 2013 See,
Direct cost should have a direct relation with the product and can be directly allocated to the final Product.
Similarly other overhead expenses not covered is indirect expenses which are ancillary.
based on this definition it is clear , Depreciation is indirect and Fixed and should not be covered under direct.
Can you determine the actual wear and tear of Truck engine in 10000 kilometer Run .
Can you determine the depreciation to shed in storage of 10000 tonne of Steel or 11000 tonne of steel or 11001 tonne of steel .

I believe I satisfy your query.

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