06-18-2009, 06:46 PM
depreciation
first of ll you should know what is depreciation.
value of the asset grdually decrease it dosent remain same. but at the end when we sale the asset then their sale value will be lower then the purchase pric. so we recognise loss e.g 500 sale price purchase was 1000 loss which will be added in the income statement is 500. our profit for the year will be reduced by the 500.
is it right way?
we have use the assert for the last 3 years and it effect the profit only in 1 year. business also can not bear the loss at the same time
SO WE OPEN ACCOUNT DEPRECIATION
we enter calculate the value(by using formula) by which valu decrease in that year and by that amount proft of the year effect.
and at the time of sale the value of the loss which effect the profit will be lower.
e.g sale price 500
purchase price 1000
accumulated depreciation 200
loss for the year is (1000-500-200) is 300
first of ll you should know what is depreciation.
value of the asset grdually decrease it dosent remain same. but at the end when we sale the asset then their sale value will be lower then the purchase pric. so we recognise loss e.g 500 sale price purchase was 1000 loss which will be added in the income statement is 500. our profit for the year will be reduced by the 500.
is it right way?
we have use the assert for the last 3 years and it effect the profit only in 1 year. business also can not bear the loss at the same time
SO WE OPEN ACCOUNT DEPRECIATION
we enter calculate the value(by using formula) by which valu decrease in that year and by that amount proft of the year effect.
and at the time of sale the value of the loss which effect the profit will be lower.
e.g sale price 500
purchase price 1000
accumulated depreciation 200
loss for the year is (1000-500-200) is 300
