Depreciation and its Accounting | PAPER III – ACCOUNTING & FINANCIAL MANAGEMENT FOR BANKERS | MODULE B: FINANCIAL STATEMENTS AND CORE BANKING SYSTEMS
Depreciation and its Accounting - Notes and MCQs Depreciation and its Accounting Meaning of Depreciation Depreciation refers to the reduction in the value of a fixed asset due to wear and tear, passage of time, obsolescence, or other factors. Causes of Depreciation Wear and tear Obsolescence Effluxion of time Depletion (for natural resources) Need for Depreciation To ascertain true profit or loss To show true financial position To make provisions for replacement For tax purposes Factors Affecting Depreciation Cost of asset Estimated useful life Estimated residual value Usage pattern Accounting Entries For charging depreciation: Depreciation A/c Dr. To Asset A/c For transferring to Profit & Loss A/c: Profit & Loss A/c Dr. To Depreciation A...