Archive about 'Depreciation & Provision'

How To Account For Disposal Of Fixed Assets Whether It is Sold For Cash Or Traded in as Part Payment For Another Asset

Accounting Treatment For Disposal Of Fixed Asset When a fixed asset is disposed off: The accounting entry is to : Step 1: Debit : Asset Disposal Account Credit: Asset Account at Cost The purpose of this entry is to transfer the cost of the fixed asset to the asset disposal account Step 2: Debit: Provision for [...]

Methods Of Accounting For Depreciation (Part 2 of 2)

In the first part, three(3) methods have been mentioned namely the Straight Line Depreciation, Reducing Balance Depreciation and the Sum of Digit method. In this final part, we shall discuss another three(3) methods for accounting for depreciation of fixed assets: REVALUATION METHOD   ·      Normally used for calculating depreciation of items such as loose tools [...]

How To Record Depreciation In The Books Of Account

Basically, there are two (2) ways of recording depreciation: 1      Depreciation Charge is recorded in Depreciation Account And Fixed Asset Account is credited with the depreciation amount.   Accounting entries as follows: Step 1: Debit: Depreciation Account Credit: Fixed Asset Account Being initial taking up the depreciation into a Depreciation account.   Step 2: At [...]

Methods Of Calculating Depreciation For Assets Bought Or Sold During An Accounting Period

Basically, there are three (3) methods of doing computing depreciation for assets bought or sold during an accounting period: 1.    Full year’s Depreciation Is Charged In The Year Of Purchase ignoring the date during the year that the assets were purchased. No depreciation is charged in the year that the assets were disposed irrespective of [...]

Methods Of Accounting For Depreciation (Part 1 of 2)

Whichever method we use to account for depreciation, we must always consider the following: The cost of asset, The probable/estimated life of the asset and The approximate residual or salvage value at the end of its life. Generally there are several methods of depreciation: Straight Line Method, Reducing Balance Method, Sum Of the Years Digits [...]

What Is Depreciation And Why Do We Need To Provide For Depreciation

WHAT IS DEPRECIATION? Depreciation is the permanent and continuing diminution in the quality, quantity or value of an asset. Depreciation Accounting deals with the allocation of costs of fixed assets over their useful lives. More simply, that part of cost of this asset which is being periodically (monthly) allocated as expense into the Income Statement [...]