📕 Depreciation - 5 | Provision for Depreciation | LIVE Recorded Classes | 11th Accounts

Visit us on : https://accountsbydp.com/ Connect with us :- Facebook :   / accounts_by_.  . Instagram :  / accounts_by.  . Depreciation | Written down value method | Class 11 | accounts | Depreciation – Class 11 – Accounts - Chapter 14 Chapter 14 – Accounts – Accountancy – Class 11 - Accounting Depreciation class 11 Accounts Meaning of depreciation Methods of Depreciation – Methods of calculating depreciation i. Straight Line Method (SLM) ii. Written Down Value Method (WDV) Depreciation accounting Provision for depreciation account Machinery disposal account depreciation sale of machinery Depreciation - Concept Features Causes factors Other similar terms - Depletion and Amortization Provisions and Reserves In accounting, there are various conventions designed to better match sales and expenses to the period in which they are incurred. One approach that companies often embrace is referred to as depreciation or amortization. Companies generally use depreciation for physical assets, such as machinery, and amortization for intangible assets, such as patents and software. Both methods permit firms to expense resources of economic value over a longer timeframe. In other words, rather than deduct the full purchase price from net income (NI) right away, companies can stretch the cost of assets over many different periods. For example, if a company bought a piece of machinery, it wouldn't have to expense it in the year that it was bought but can stretch out the cost of the machinery over a number of years until it is sold or disused; a period known as its. Written-down value can be calculated by a method of depreciation that is sometimes called the diminishing balance method. This accounting technique reduces the value of an asset by a set percentage each year. Various other depreciation techniques also exist in accounting and are used to capitalize the expenses of different types of assets. One example is straight line depreciation, which deducts the same cost every year based on dividing the difference between the asset's cost and its expected salvage value by the number of years it is expected to be used. The written-down value of a depreciated asset is important because it is included in the comprehensive value of a company’s total assets. Depreciated assets typically start on the books at their purchased price and are often sold before they are depreciated to zero. The depreciated value of an asset is also important in helping to determine the selling price of the asset. When selling the asset, the book value is used to help determine the minimum value for which it will be sold. Real assets typically sell for a price range within their book value and the highest fair market value. If a gain occurs from the sale of an asset, it will be taxable in most cases. The taxable gain on a sale is often determined by comparing the sales from the item to its written-down value.