Doubt regarding depreciation reserve

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i am doing an audit for a limited company,i found depriciation reserve having debit balance!

                 what my doubt is how the depriciation reserve was created and where it comes in balance sheet?

                                       plz... tell me the answer....

Replies (6)

You should check their entry passed in books, Any provision and reserve donot have debit balalce

Regd

Lovenish Bansal

I m agrre with lovinesh bansal, and suggested you to verify the books of accounts.

See Avinash...Reserves always have Cr. balance so comes under laibility side.

Depreciation Reserve is created by Debiting P&L A/c

as per new schedule 6 format......reserves can be negative on the liabilities side.....but depreciation reserve makes no sense being negative...nor it can be utilised anywhere else.......so there might be some mistake in the books of accounts.....you should check them properly

Hi Avinash,

Depreciation reserve is the nothing but accumulation of Depreciation,  Thus Asset is shown at the historical price in the Balance sheet while Depreciation reserve is increased every year with the depreciation amounts of the respective years on the Liability Side.


There is no chance that Depreciation reserve should be having debit balance, There should be some mistakes in the entries.. Please check into details.

thank you very much for your suggestions!!!!!!!!

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