accounting method to calculate depreciation is to provide reserve amount...
accounting entries are....
1. depreciation account dr
to provision for depreciation a/c
2. p & l account dr
to depreciation account
here , my question is why not the entries are as follow
1. depreciation account dr
to asset account
2. p&l account dr
to provision for depreciation acc.
3. provision for depreciation acc. dr
to depreciation account
Provision for depreciation means amount set aside for reserving depreciation on assets.
when depreciation is charged on assets such depreciation is taken from depreciation reserve and for this the depreciation is credited to depreciation reserve account and debited to p/l a/c and for double effect depreciation reserve is debited to depreciation account
CAclubindia
