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where will be effect the amount of depreciation in company
final account? If it will effect in P&L A/c & Balance Sheet
also than will amount be same in both sheet?
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Answer Posted / atul
Miss ankita first of all land never be depreciated it always appreciated.
Now comes to the question there are two main methods one is SLM and other is WDV. According to SLM dep. is charged as a fixed amt. per year where as in WDV dep. is charged on the reducing balance. Suppose current year dep.is Rs.2000 so it will be reflect in current year's p&l a/c and will be reduced from the asset in balance sheet now again in IInd year dep.is Rs.1000 will reflect in current year's p&l a/c and will be deducted from asset in balance sheet and the asset would be shown as net means after deducting depreciation.
As per CA ans (5000+4000=9000) will be reduced in 2nd year so it means company is maintaining accumulated depreciation a/c that's why the asset is shown on historical value in the balance sheet. If u will reduce this accumulated dep. from the historical value u will get the net value of the asset. Similarly as u reduce dep. yearly from the value of the asset or show ur asset in B/s as net every year.
Hope now u will understand the situation clearly.
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