Depreciation reserve versus accumulated sdepreciation
This query is : Resolved
13 January 2022
What is the exact difference between accumulated depreciation and depreciation reserve? May some explain in detail?
13 January 2022
Depreciation reserve is a business fund in which the probable replacement cost of equipment is accumulated each year over the life of the asset.
Accumulated depreciation is total depreciation charged over the life of the asset based on historical cost.
Accumulated depreciation is total depreciation charged over the life of the asset based on historical cost.
15 January 2022
Resp Sir i could not understand. Kindly clarify.
what i know is that, at the time of charging depreciation, the amount of depreciation, instead of deducting from Fixed Assets, is credited to Accumulated depreciation and shown in liability. In google, i found that when accumulated depreciation is invested some where it is called as depreciation reserve. It has becomes very complex and i am fully confused on it. Would be grateful, if u could kindly break the concept of depreciation reserve and accumulated depreciation in a simple way.
Thnx and regd
what i know is that, at the time of charging depreciation, the amount of depreciation, instead of deducting from Fixed Assets, is credited to Accumulated depreciation and shown in liability. In google, i found that when accumulated depreciation is invested some where it is called as depreciation reserve. It has becomes very complex and i am fully confused on it. Would be grateful, if u could kindly break the concept of depreciation reserve and accumulated depreciation in a simple way.
Thnx and regd
15 January 2022
Your understanding of accumulated depreciation is right.
For replacement of the asset after the life of the existing asset funds are earmarked and kept aside for which reserve is created based on replacement cost.
For replacement of the asset after the life of the existing asset funds are earmarked and kept aside for which reserve is created based on replacement cost.
15 January 2022
Accumulated depreciation is used to write off the asset from the books of accounts when asset served it's life or on it's disposal.
Depreciation reserve is used to buy new assets in case of replacement.
Depreciation reserve is used to buy new assets in case of replacement.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax on Deemed Capital Gain
- Type of Capital Gain
- Exiting partner in partnership firm in gst portal
- Reporting in TDS return
- Consequences of Non-Deduction of TDS under Income Tax???????????????
- Gst on travel by air for business purposes
- Can a single LLP in India legally operate multiple unrelated businesses (Travel, Cloud Kitchen, Ecom
- Banking Related Issue
- Residential status of non resident
- ITR-3 File/Error Found
- CASH GIFT FROM BLOOD RELATIVE
- Account freezed for Ineligible ITC Scrutiny for GST Annual Return
- Rent claimed on building given on permissive possession basis
- TDS on property - Form 141 query
- Seeking Advice: High Tax Shortfall on Job Switch + Let-Out House Property Loss in FY 2025-26
- Housing Society-ITR5
- TDS on Rent received on redevelopment of building
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
