{"id":434,"date":"2019-04-11T22:59:25","date_gmt":"2019-04-11T22:59:25","guid":{"rendered":"https:\/\/commerceiets.com\/?p=434"},"modified":"2019-04-11T22:59:25","modified_gmt":"2019-04-11T22:59:25","slug":"depreciation-accounting","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/depreciation-accounting\/","title":{"rendered":"DEPRECIATION ACCOUNTING"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#DEPRECIATION_ACCOUNTING\" title=\"DEPRECIATION ACCOUNTING\">DEPRECIATION ACCOUNTING<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#METHODS_OF_CHARGING_DEPRECIATION\" title=\"METHODS OF CHARGING DEPRECIATION\">METHODS OF CHARGING DEPRECIATION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#STRAIGHT_LINE_METHOD_FOR_DEPRECIATION_ACCOUNTING\" title=\"STRAIGHT LINE METHOD FOR DEPRECIATION ACCOUNTING\">STRAIGHT LINE METHOD FOR DEPRECIATION ACCOUNTING<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#CALCULATION\" title=\"CALCULATION \">CALCULATION <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#JOURNAL_ENTERIES\" title=\"JOURNAL ENTERIES\">JOURNAL ENTERIES<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#ADVANTAGES_MERITS_OF_STRAIGHT_LINE_METHOD\" title=\"ADVANTAGES\/ MERITS OF STRAIGHT LINE METHOD\">ADVANTAGES\/ MERITS OF STRAIGHT LINE METHOD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#DISADVANTAGES_DEMERITS_OF_STRAIGHT_LINE_METHOD\" title=\"DISADVANTAGES\/ DEMERITS OF STRAIGHT LINE METHOD\">DISADVANTAGES\/ DEMERITS OF STRAIGHT LINE METHOD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#SUITABILITY_OF_THIS_METHOD\" title=\"SUITABILITY OF THIS METHOD\">SUITABILITY OF THIS METHOD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#DIMNISHING_BALANCE_METHOD_FOR_DEPRECIATION_ACCOUNTING\" title=\"DIMNISHING BALANCE METHOD FOR DEPRECIATION ACCOUNTING\">DIMNISHING BALANCE METHOD FOR DEPRECIATION ACCOUNTING<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#CALCULATION-2\" title=\"CALCULATION\">CALCULATION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#JOURNAL_ENTERIES-2\" title=\"JOURNAL ENTERIES\">JOURNAL ENTERIES<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#MERITS_OF_DIMNISHING_BALANCE_METHOD\" title=\"MERITS OF DIMNISHING BALANCE METHOD\">MERITS OF DIMNISHING BALANCE METHOD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#DEMERITS_OF_DIMNISHING_BALANCE_METHOD\" title=\"DEMERITS OF DIMNISHING BALANCE METHOD\">DEMERITS OF DIMNISHING BALANCE METHOD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#DIFFERENCE_BETWEEN_STRAIGHT_LINE_AND_DIMNISHING_BALANCE_METHOD\" title=\"DIFFERENCE BETWEEN STRAIGHT LINE AND DIMNISHING BALANCE METHOD\">DIFFERENCE BETWEEN STRAIGHT LINE AND DIMNISHING BALANCE METHOD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#FACTORS_CONSIDERED_WHILE_SELECTING_DEPRECIATION_METHOD\" title=\"FACTORS CONSIDERED WHILE SELECTING DEPRECIATION METHOD: \">FACTORS CONSIDERED WHILE SELECTING DEPRECIATION METHOD: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#CONVENTION_OF_CONSISTENCY\" title=\"CONVENTION OF CONSISTENCY:\">CONVENTION OF CONSISTENCY:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#CONVENTION_OF_CONSERVATISM\" title=\"CONVENTION OF CONSERVATISM: \">CONVENTION OF CONSERVATISM: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#INCOME_TAX\" title=\"INCOME TAX: \">INCOME TAX: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#CALCULATION-3\" title=\"CALCULATION: \">CALCULATION: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#BENEFIT\" title=\"BENEFIT: \">BENEFIT: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#CAUSE_OF_DECREASE_IN_THE_VALUE_OF_AN_ASSET\" title=\"CAUSE OF DECREASE IN THE VALUE OF AN ASSET: \">CAUSE OF DECREASE IN THE VALUE OF AN ASSET: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#TECHNOLOGICAL_INNOVATION\" title=\"TECHNOLOGICAL INNOVATION: \">TECHNOLOGICAL INNOVATION: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#LAW_OF_THE_LAND\" title=\"LAW OF THE LAND: \">LAW OF THE LAND: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#ACCOUNTING_TREATMENT\" title=\"ACCOUNTING TREATMENT\">ACCOUNTING TREATMENT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#WHEN_PROVISION_FOR_DEPRECIATION_ACCOUNT_IS_MAINTAINED\" title=\"WHEN PROVISION FOR DEPRECIATION ACCOUNT IS MAINTAINED:\">WHEN PROVISION FOR DEPRECIATION ACCOUNT IS MAINTAINED:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#JOURNAL_ENTERIES-3\" title=\"JOURNAL ENTERIES\">JOURNAL ENTERIES<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#WHEN_PROVISION_FOR_DEPRECIATION_ACCOUNT_IS_NOT_MAINTAINED\" title=\"WHEN PROVISION FOR DEPRECIATION ACCOUNT IS NOT MAINTAINED:\">WHEN PROVISION FOR DEPRECIATION ACCOUNT IS NOT MAINTAINED:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/commerceiets.com\/depreciation-accounting\/#DIFFERENCE_BETWEEN_DEPRECIATION_ACCOUNT_AND_PROVISION_FOR_DEPRECIATION_ACCOUNT\" title=\" DIFFERENCE BETWEEN DEPRECIATION ACCOUNT AND PROVISION FOR DEPRECIATION ACCOUNT\"> DIFFERENCE BETWEEN DEPRECIATION ACCOUNT AND PROVISION FOR DEPRECIATION ACCOUNT<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"DEPRECIATION_ACCOUNTING\"><\/span>DEPRECIATION ACCOUNTING<span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<p class=\"has-medium-font-size\"><a aria-label=\"Depreciation (opens in a new tab)\" rel=\"noreferrer noopener\" href=\"https:\/\/commerceiets.com\/depreciation\/\" target=\"_blank\">Depreciation<\/a> denotes the decrease in the book value of the fixed assets. It is the permanent and gradual decrease in the value of fixed assets. It is due to use, effluxion of time, obsolescence, expiration of legal rights or any other cause. Depreciation Accounting is done to provide the assets at true value in the books of accounts<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"METHODS_OF_CHARGING_DEPRECIATION\"><\/span><strong>METHODS OF CHARGING DEPRECIATION<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">There are various methods of charging\ndepreciation like<\/p>\n\n\n\n<ul><li>Straight Line Method<\/li><li>Diminishing balance Method<\/li><li>Sum of the years digit method<\/li><li>Annuity method<\/li><li>Sinking fund method<\/li><li>Insurance Policy method<\/li><li>Machine hour rate method<\/li><li>Depletion method<\/li><li>Revaluation method<\/li><li>Mileage method<\/li><\/ul>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"STRAIGHT_LINE_METHOD_FOR_DEPRECIATION_ACCOUNTING\"><\/span><strong>STRAIGHT LINE METHOD FOR DEPRECIATION ACCOUNTING<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">The Straight Line Method of charging depreciation has different names like Original Cost Method or Fixed Installment Method or Fixed Percentage Method.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">In this method, a fixed proportion of the original cost of the asset writes off each year. The asset account reduced to its scrap value at the end of the estimated economic useful life. The assumption of this method is that the depreciation is a function of time.<\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"CALCULATION\"><\/span>CALCULATION <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong>Calculation of\nAmount of Depreciation<\/strong><\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">d= Cost of Asset- Residual Life\/ No. of years of estimated useful lif<br \/><\/p>\n\n\n\n<ul><li><strong>Calculation of\nPercentage\/ Rate of Depreciation<\/strong><\/li><\/ul>\n\n\n\n<p class=\"has-medium-font-size\">Rate of Depreciation= Amount of depreciation\/ Original cost of Asset*100 <\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Example:<\/strong> Calculate amount\nof annual depreciation from the following information:<\/p>\n\n\n\n<p class=\"has-medium-font-size\">The machinery costs \u20b950,000 and its installation cost is \u20b91,000. Estimated scrap value is \u20b95,000.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Annual Depreciation= 50,000-5000\/ 10= \u20b94,500 per annum<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Rate of Depreciation= 4,500\/50,000*100= 9% per annum<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"JOURNAL_ENTERIES\"><\/span>JOURNAL ENTERIES<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"647\" height=\"512\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/JE-FINAL.png\" alt=\"\" class=\"wp-image-436\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/JE-FINAL.png 647w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/JE-FINAL-300x237.png 300w\" sizes=\"(max-width: 647px) 100vw, 647px\" \/><\/figure>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"ADVANTAGES_MERITS_OF_STRAIGHT_LINE_METHOD\"><\/span>ADVANTAGES\/ MERITS OF STRAIGHT LINE METHOD<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">The following are the merits\/ advantages of\nstraight line method:<\/p>\n\n\n\n<ol><li><strong>SIMPLE:<\/strong> It is very easy method of providing depreciation and the calculations are very simple.<\/li><li><strong>ASSET FULLY WRITES OFF:<\/strong> In this method, the asset account writes off fully at the end of its useful working life.<\/li><li><strong>KNOWLEDGE OF TOTAL DEPRECIATION CHARGED:<\/strong> The amount of total depreciation charges to Profit and Loss Account. It can be easily ascertained by multiplying the annual installment of depreciation with the number of years, the machine has been used.<\/li><li><strong>SUITABLE FOR FIXED LIFE ASSETS: <\/strong>This method is very suitable for those assets which have a fixed working life. Eg: Lease, Furniture, Patents etc.<\/li><li>Under this method, there is same effect on the Profit and Loss Account as same amount of depreciation charges every year.<\/li><\/ol>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"DISADVANTAGES_DEMERITS_OF_STRAIGHT_LINE_METHOD\"><\/span>DISADVANTAGES\/ DEMERITS OF STRAIGHT LINE METHOD<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol><li><strong>INTEREST ON CAPITAL:<\/strong> This method does not take consideration the interest on capital invested in fixed assets. Thus, the asset under-capitalizes and profits over-states.<\/li><li><strong>REPAIRS AND RENEWALS:<\/strong> As the amount of depreciation remains constant every year, the expenses on repairs and maintenance increase gradually. So, profit and loss account charges heavily in the later year.<\/li><li><strong>DECREASE IN UTILITY: <\/strong>Asset in the earlier part of its working life provides more utility than in future period when asset gradually becomes old. Thus benefit and cost do not matches rationally.<\/li><li><strong>NOT RECOGNISED BY TAX AUTHORITIES:<\/strong> Income tax Authorities do not recognise this system of depreciation.<\/li><li><strong>NO PROVISION FOR REPLACEMENT:<\/strong> The firms do not invests the amount of depreciation in outside business. So, there is no provision of funds for replacement of assets.<\/li><li>The calculation of depreciation is difficult when there are different machines with different life spans.<\/li><li>It is difficult to exactly estimate the scrap value of the assets.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"SUITABILITY_OF_THIS_METHOD\"><\/span>SUITABILITY OF THIS METHOD<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">This method of charging depreciation is suitable where assets get depreciates with effluxion of time i.e. Patents, Leasehold etc. This method is also suitable for those assets which do not require much repairs and renewals. The firm follows this method where the repair charges are almost uniform throughout the life of the asset.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"DIMNISHING_BALANCE_METHOD_FOR_DEPRECIATION_ACCOUNTING\"><\/span><strong>DIMNISHING BALANCE METHOD FOR DEPRECIATION ACCOUNTING<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Diminishing Balance Method is the another method of depreciation accounting. It has different names like Reducing Balance Method or Written Down Value Method.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Under this method, a fixed percentage writes off each year on the balance of the asset, so that the asset reduces to its estimated scrap value at the end of the useful life.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">As depreciation does not charge on the original cost of asset, the amount of the depreciation will be lesser and lesser as the time will pass. The book value of asset can never be zero under this method.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">The factors taken into consideration while determining rate of depreciation are:<\/p>\n\n\n\n<ul><li>Cost of Asset<\/li><li>Estimated useful life of Asset<\/li><li>Estimated Scrap Value<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CALCULATION-2\"><\/span>CALCULATION<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Rate of Depreciation:<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">r= 1-(S\/C)(1\/n)<\/p>\n\n\n\n<p class=\"has-medium-font-size\">r= Rate of\nDepreciation<\/p>\n\n\n\n<p class=\"has-medium-font-size\">n= estimated useful\nlife of asset<\/p>\n\n\n\n<p class=\"has-medium-font-size\">s= residual\/\nscrap value<\/p>\n\n\n\n<p class=\"has-medium-font-size\">c= original cost\nof asset<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>EXAMPLE:<\/strong> M\/s Kavish Ltd. Purchased in machinery for \u20b91,60,000 on 1<sup>st<\/sup> April, 2014. Its useful life is 4 years and scrap value is \u20b910,000. Then the rate of depreciation will be:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"673\" height=\"346\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/WRITTEN-DOWN-VALUE.png\" alt=\"\" class=\"wp-image-437\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/WRITTEN-DOWN-VALUE.png 673w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/WRITTEN-DOWN-VALUE-300x154.png 300w\" sizes=\"(max-width: 673px) 100vw, 673px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"JOURNAL_ENTERIES-2\"><\/span>JOURNAL ENTERIES<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"647\" height=\"512\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/JE-FINAL-1.png\" alt=\"\" class=\"wp-image-438\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/JE-FINAL-1.png 647w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/JE-FINAL-1-300x237.png 300w\" sizes=\"(max-width: 647px) 100vw, 647px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MERITS_OF_DIMNISHING_BALANCE_METHOD\"><\/span>MERITS OF DIMNISHING BALANCE METHOD<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol><li><strong>RATIONAL MATCHING: <\/strong>Under this method, the depreciation charges are high in earlier years when the machine is most useful and produce high revenues. Thus, the cost and revenues match rationally.<\/li><li><strong>OBSOLESCENCE:<\/strong> Obsolescence does not affect much because the major part of the asset writes off as depreciation. So, the management feels no difficulty in replacing the asset.<\/li><li><strong>RECOGNITION FROM INCOME TAX DEPARTMENT: <\/strong>This method assumes more significance because income tax authorities recognize this method for accounting purpose.<\/li><li><strong>SUITABLE FOR LONG LIFE ASSETS: <\/strong>This method is suitable for those assets which have long life.<\/li><li>The amount of depreciation and repairs and maintenance part put some amount of burden on Profit and Loss Account. This is so because amount of depreciation goes on decreasing every year whereas cost of repair increases.<\/li><li>Fresh calculations are not necessary when additions are there in the asset.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DEMERITS_OF_DIMNISHING_BALANCE_METHOD\"><\/span>DEMERITS OF DIMNISHING BALANCE METHOD<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol><li><strong>INTEREST ON CAPITAL:<\/strong> This methods ignores the interest on capital invested in fixed assets. As a result the profit over states.<\/li><li><strong>NO FUNDS FOR REPLACEMENT:<\/strong> This method does not solve the problem of availability of funds at the time of replacement of assets. the firms retains the amount of depreciation charged with itself.<\/li><li><strong>ASSET DO NOT REDUCES TO ZERO:<\/strong> The value of asset under this method never reduces to zero. Though the asset becomes useless after its working life is over but the book value does not extinguish.<\/li><li><strong>RATE OF DEPRECIATION:<\/strong> As compared to straight line method, it is difficult to calculate the rate of depreciation under this method.<\/li><li>It ignores the actual use of the asset.<\/li><\/ol>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"DIFFERENCE_BETWEEN_STRAIGHT_LINE_AND_DIMNISHING_BALANCE_METHOD\"><\/span><strong>DIFFERENCE BETWEEN STRAIGHT LINE AND DIMNISHING BALANCE METHOD<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"554\" height=\"531\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/STRAIGHT-LINE-VS-DIMNIDHING-BALANCE-.png\" alt=\"\" class=\"wp-image-440\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/STRAIGHT-LINE-VS-DIMNIDHING-BALANCE-.png 554w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/STRAIGHT-LINE-VS-DIMNIDHING-BALANCE--300x288.png 300w\" sizes=\"(max-width: 554px) 100vw, 554px\" \/><\/figure>\n\n\n\n<p class=\"has-medium-font-size\">Both Straight Line Method and Diminishing Balance Method have their own merits and demerits in providing the depreciation for the assets. The straight line method is very simple to understand and easy to calculate whereas the diminishing balance method is helpful in better matching of revenue and expenses derived from the asset by the company. Also, the income tax authorities prefer written down value method over the straight line method. <\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"FACTORS_CONSIDERED_WHILE_SELECTING_DEPRECIATION_METHOD\"><\/span><strong>FACTORS CONSIDERED WHILE SELECTING DEPRECIATION METHOD:<\/strong> <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CONVENTION_OF_CONSISTENCY\"><\/span>CONVENTION OF CONSISTENCY:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Convention of Consistency means the accounting practice should stay the same from one period to another. It signifies that the use of same accounting techniques for assembling financial statement in different years. A business must use consistent approach in selecting a method for depreciating the group of assets i.e. different methods of depreciation applies to different group of assets. But the firm may use same method in successive years.&nbsp; <\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"CONVENTION_OF_CONSERVATISM\"><\/span>CONVENTION OF CONSERVATISM: <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">It is called \u2018Doctrine of Prudence\u2019. Convention of Conservatism states to anticipate all the future losses and ignore gains. This concept should apply not only in selecting the depreciation method, but also for estimated life and salvage value. Depreciation is purely an estimate. The amount of depreciation must not produce higher periodic expenses in order to avoid overstating profits. <\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"INCOME_TAX\"><\/span>INCOME TAX: <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-text-align-left has-medium-font-size\">In financial accounting, income tax consideration for depreciation should be kept entirely separate. Two separate methods of depreciation can be used for business accounting and tax accounting. But for avoiding cost of maintaining two sets of records, a business may use same figures for both the purposes.<\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"CALCULATION-3\"><\/span>CALCULATION: <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">For avoiding separate calculation for each type of assets, a single, rate of depreciation is applied to all the assets of a business. Many business houses simply apply the same method to all the assets, ignoring the estimated lives and salvage values.<\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"BENEFIT\"><\/span>BENEFIT<strong>:<\/strong> <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">An asset provides service to the business more in earlier years than the later years. Also, repairs and maintenance increase through the life of an asset. Therefore, depreciation should be more in earlier years than in the later years. <\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"CAUSE_OF_DECREASE_IN_THE_VALUE_OF_AN_ASSET\"><\/span>CAUSE OF DECREASE IN THE VALUE OF AN ASSET: <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">The decline in the value of the asset may be a function of time or usage or extraction. The cause of depreciation should be kept in mind before applying the method of depreciation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TECHNOLOGICAL_INNOVATION\"><\/span>TECHNOLOGICAL INNOVATION: <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Because of the technological innovation, a machine may become obsolete before its estimated economic life. If the probability of obsolescence is high in the near future, the estimated economic life should be shortened.<\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"LAW_OF_THE_LAND\"><\/span>LAW OF THE LAND: <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">The Law of the Land may determine the method and specific rate of depreciation for a particular rate for particular business entities. Example: In India, for all limited companies, depreciation is to be calculated in accordance with the rates specified in the Schedule II of the Companies Act, 2013.<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><em>C<\/em>From the above, it can be concluded that different considerations may indicate different depreciation methods. Therefore, in selecting a method, a clear choice must be made based on the relative importance of the considerations. It should be kept in mind that the cost of asset over its estimated economic life in a systematic and rational manner, so that costs should be matched with the expected benefits. <\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"ACCOUNTING_TREATMENT\"><\/span><strong>ACCOUNTING TREATMENT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">There are two ways or methods of depreciation accounting: <\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"WHEN_PROVISION_FOR_DEPRECIATION_ACCOUNT_IS_MAINTAINED\"><\/span>WHEN PROVISION FOR DEPRECIATION ACCOUNT IS MAINTAINED:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Under this method, depreciation is not directly charged to the Asset Account. The depreciation for the period is debited to Depreciation Account and Credited to \u2018Accumulated Depreciation Account\u2019 or \u2018Provision for depreciation Account.\u2019<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"271\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROVISION-FOR-DEP-1024x271.png\" alt=\"\" class=\"wp-image-442\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROVISION-FOR-DEP-1024x271.png 1024w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROVISION-FOR-DEP-300x80.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROVISION-FOR-DEP-768x204.png 768w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROVISION-FOR-DEP.png 1030w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"has-medium-font-size\">In the Balance sheet, asset appears at the original cost and the accumulated depreciation is shown as a deduction from the asset or shown at the liabilities side of the Balance Sheet. <\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"813\" height=\"325\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROV-FOR-DEP.png\" alt=\"\" class=\"wp-image-444\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROV-FOR-DEP.png 813w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROV-FOR-DEP-300x120.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROV-FOR-DEP-768x307.png 768w\" sizes=\"(max-width: 813px) 100vw, 813px\" \/><\/figure>\n\n\n\n<p class=\"has-medium-font-size\">Here, from the balance sheet, the original cost of the asset and the total depreciation to date that has been charged on that asset can be easily ascertained. As due year passes, the balance of the accumulated depreciation goes on increasing since constant credit is given to this account in each accounting year. After the expiry of the useful life or when asset is sold before the expiry of useful life, these accounts are closed by Debiting the Accumulated Depreciation Account and Crediting the Asset Account. Any balance in the Asset Account is transferred to the Profit and Loss Account.<\/p>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"JOURNAL_ENTERIES-3\"><\/span>JOURNAL ENTERIES<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"802\" height=\"393\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROV-DEP-3.png\" alt=\"\" class=\"wp-image-445\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROV-DEP-3.png 802w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROV-DEP-3-300x147.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/PROV-DEP-3-768x376.png 768w\" sizes=\"(max-width: 802px) 100vw, 802px\" \/><\/figure>\n\n\n\n<h2 class=\"has-text-align-left wp-block-heading\"><span class=\"ez-toc-section\" id=\"WHEN_PROVISION_FOR_DEPRECIATION_ACCOUNT_IS_NOT_MAINTAINED\"><\/span>WHEN PROVISION FOR DEPRECIATION ACCOUNT IS NOT MAINTAINED:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Under this method, the depreciation is directly charged to the Assets Account. The value of assets is reduced by the amount of depreciation. Depreciation account is closed by transferring it to the Profit &amp; Loss Account. In the Balance sheet, asset appears at its written down value i.e. Cost less depreciation charged to date. <\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"884\" height=\"280\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/123.png\" alt=\"\" class=\"wp-image-447\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/123.png 884w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/123-300x95.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/123-768x243.png 768w\" sizes=\"(max-width: 884px) 100vw, 884px\" \/><\/figure>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"DIFFERENCE_BETWEEN_DEPRECIATION_ACCOUNT_AND_PROVISION_FOR_DEPRECIATION_ACCOUNT\"><\/span><strong> DIFFERENCE BETWEEN DEPRECIATION ACCOUNT AND PROVISION FOR DEPRECIATION ACCOUNT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"782\" height=\"474\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/DIFFERENCE-ROV-FOR-DEP.png\" alt=\"\" class=\"wp-image-449\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/DIFFERENCE-ROV-FOR-DEP.png 782w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/DIFFERENCE-ROV-FOR-DEP-300x182.png 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/DIFFERENCE-ROV-FOR-DEP-768x466.png 768w\" sizes=\"(max-width: 782px) 100vw, 782px\" \/><\/figure>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting\/\"><strong>Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/non-profit-organisation\/\"><strong>Non profit organisation<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/depreciation\/\"><strong>Depreciation<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/liquidity-ratios-types\/\"><strong>Liquidity ratios<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/nature-of-accounting\/\"><strong>Nature of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/receipt-and-payment-account-pdf\/\"><strong>Receipts and Payments Account<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/depreciation-accounting\/\"><strong>Depreciation Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/acid-test-ratio-formula\/\"><strong>Acid Test Ratio<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/benefits-of-accounting\/\"><strong>Benefits of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-accounting\/\"><strong>Scope of accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/hire-purchase-accounting-notes-pdf\/\"><strong>Hire Purchase Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cash-ratio\/\"><strong>Cash Ratio<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-cost-accounting-and-financial-accounting\/\"><strong>Difference between cost accounting and financial accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-financial-accounting-management-accounting-and-cost-accounting\/\"><strong>Financial accounting, cost accounting and management accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-hire-purchase-and-instalment\/\"><strong>Difference between hire purchase and instalment system<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/financial-ratio-analysis\/\"><strong>Financial ratio analysis<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-transaction-and-event\/\"><strong>Difference between transaction and event<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/transactions\/\"><strong>Transactions<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/users-of-accounting\/\"><strong>Users of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/current-ratio-formula\/\"><strong>Ratio analysis<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/limitations-of-accounting-2\/\"><strong>Limitation of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/capital-expenditure\/\"><strong>Capital Expenditure<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/instalment-system\/\"><strong>Instalment System<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-consignment-and-sale\/\"><strong>Difference between consignment and sale<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/book-keeping\/\"><strong>Book Keeping<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revenue-expenditure\/\"><strong>Revenue Expenditure<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reserves-accounting\/\"><strong>Reserves Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-normal-and-abnormal-loss\/\"><strong>Abnormal loss vs normal loss in consignment<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accountancy\/\"><strong>Accountancy<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-capital-expenditure-and-revenue-expenditure\/\"><strong>Difference between capital and revenue expenditure<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reserves-accounting\/\"><strong>Provisions&nbsp;<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/treatment-of-loss-on-consignment\/\"><strong>Treatment of loss on consignment<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-is-an-art-or-science\/\"><strong>Accounting as science or an art<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-equation\/\"><strong>Accounting Equation<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/single-entry-system-in-accounting\/\"><strong>Single entry system<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-treatment-of-consignment\/\"><strong>Accounting treatment of consignment<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-is-an-art-or-science\/\"><strong>Book Keeping vs accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/deferred-revenue-expenditure\/\"><strong>Deferred Revenue Expenditure<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/statement-of-affairs-and-balance-sheet-difference\/\"><strong>Difference between statement of affairs and balance sheet<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-joint-venture-and-consignment\/\"><strong>Joint venture vs consignment<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-is-an-art-or-science\/\"><strong>Book keeping vs accountancy<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/capital-receipt\/\"><strong>Capital receipt<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/ifrs\/\"><strong>IFRS<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/departmental-accounting\/\"><strong>Departmental Accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-is-an-art-or-science\/\"><strong>Accounting vs accountancy<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revenue-receipt\/\"><strong>Revenue receipt<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/balance-sheet\/\"><strong>Balance Sheet<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/methods-of-departmental-accounting\/\"><strong>Methods of departmental accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/basis-of-accounting\/\"><strong>Basis of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-capital-and-revenue-receipt\/\"><strong>Difference between capital and revenue receipt<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/profit-and-loss-account\/\"><strong>Profit and loss Account<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/allocation-of-expenses-in-departmental-accounting\/\"><strong>Allocation of expenses in departmental accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/branches-of-accounting\/\"><strong>Branches of accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-accounting-concepts-and-conventions\/\"><strong>Difference between accounting concepts and conventions<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/trading-account\/\"><strong>Trading Account<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/inter-departmental-transfers\/\"><strong>Inter-departmental transfers<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/cash-and-mercantile-system-of-accounting\/\"><strong>Cash and mercantile system of accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-standards\/\"><strong>Accounting Standards<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/voyage-account\/\"><strong>Voyage Account<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/different-types-of-branches\/\"><strong>Different types of branches<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/accounting-principles\/\"><strong>Accounting Principles<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/objectives-of-accounting\/\"><strong>Objectives of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-for-incomplete-voyage\/\"><strong>Accounting for Incomplete Voyage<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-departmental-and-branch-accounting\/\"><strong>Departmental vs Branch accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/golden-rules-of-accounting\/\"><strong>Golden ru\nles of accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-of-accounting\/\"><strong>Process of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/joint-venture\/\"><strong>Joint venture<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/methods-of-branch-accounting\/\"><strong>Methods of branch accounting<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/double-entry-system-of-accounting\/\"><strong>Double entry system of book keeping<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-accounting\/\"><strong>Scope of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-joint-venture-and-partnership\/\"><strong>Joint Venture Vs Partnership<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/incorporation-of-branch-trial-balance\/\"><strong>Incorporation of branch trial balance<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-double-single-entry-system\/\"><strong>Double entry vs Single entry system<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-accounting-concepts-and-conventions\/\"><strong>Accounting Concepts vs Accounting conventions<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/methods-of-recording-transactions-in-joint-venture\/\"><strong>Methods of recording transactions in Joint Venture<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/garner-vs-murray-rule\/\"><strong>Garner VS Murray Rule<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/history-of-accounting-pdf\/\"><strong>History of Accounting<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-provisions-and-reserves\/\"><strong>Difference between provisions and reserves<\/strong><\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consignment\/\"><strong>Consignment<\/strong><\/a><\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>DEPRECIATION ACCOUNTING Depreciation denotes the decrease in the book value of the fixed assets. It is the permanent and gradual decrease in the value of fixed assets. It is due to use, effluxion of time, obsolescence, expiration of legal rights or any other cause. Depreciation Accounting is done to provide the assets at true value&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/depreciation-accounting\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;DEPRECIATION ACCOUNTING&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":509,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,11],"tags":[13,14],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/434"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=434"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/434\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/509"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}