what is entry for depreciation?
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Answer Posted / ali asad
depreciation is not an actual expense paid in cash, but it
is assumed by owner to estimate the useful life of an
asset.we determine the life span of an asset then we apply
a certain rate of depriciation upon the asset so that we
can purchase a new asset after the finishing of the useful
life of an asset.
As we use an asset it certainly loose its efficiency.change
in efficiency is its depreciation.due to resuce in its
efficienc the asset reduce its value,however we are not
paying it in actual so there is no ivolvement of bank or
cash at all.
correct entry is:
Depriciation A/c
to Accumulated Dep.A/c
depreciation is an expense and dbit to profit & loss and
Acc.dep. is transfer to reserves on credit side of
balancesheet so Assets are on debit side and the
Acc.depriciation automatically adjust the balance of assets
on debit side of balance sheet.
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