PPT : Depreciation Accounting - 1 | Accountancy Class 11 - Commerce PDF Download

 Page 2


                                                                                                                  
                                                
    
 
DEPRECIATION  ACCOUNTING 
 Meaning:- 
 Depreciation is the decrease in the value of Depreciable Asset due 
to wear and tear, passage of time, change of technology etc.  
 It is charged every year and deducted from book value of 
depreciable asset to calculate the value of depreciable asset which 
to be shown in Balance sheet.  
CA PARDEEP MAKKAR FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 2 
Page 3


                                                                                                                  
                                                
    
 
DEPRECIATION  ACCOUNTING 
 Meaning:- 
 Depreciation is the decrease in the value of Depreciable Asset due 
to wear and tear, passage of time, change of technology etc.  
 It is charged every year and deducted from book value of 
depreciable asset to calculate the value of depreciable asset which 
to be shown in Balance sheet.  
CA PARDEEP MAKKAR FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 2 
 
? Depreciation is a non-cash expenditure. 
? Land is never depreciated. 
? Current Assets are never depreciated instead valued.  
 
CA PARDEEP MAKKAR 
 
FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 3 
DEPRECIATION  ACCOUNTING 
Important Note:- 
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DEPRECIATION  ACCOUNTING 
 Meaning:- 
 Depreciation is the decrease in the value of Depreciable Asset due 
to wear and tear, passage of time, change of technology etc.  
 It is charged every year and deducted from book value of 
depreciable asset to calculate the value of depreciable asset which 
to be shown in Balance sheet.  
CA PARDEEP MAKKAR FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 2 
 
? Depreciation is a non-cash expenditure. 
? Land is never depreciated. 
? Current Assets are never depreciated instead valued.  
 
CA PARDEEP MAKKAR 
 
FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 3 
DEPRECIATION  ACCOUNTING 
Important Note:- 
e(i) are expected to be used during more than one accounting period;    
and 
  (ii) have a limited useful life ; and 
  (iii) are held by an enterprise for use in the production or supply of 
goods and services for rental to others or for administrative purposes 
and not for the purpose of sale in the ordinary  course of business. 
 
CA PARDEEP MAKKAR 
 
FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 4 
DEPRECIATION  ACCOUNTING 
Depreciable Assets are those which:- 
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DEPRECIATION  ACCOUNTING 
 Meaning:- 
 Depreciation is the decrease in the value of Depreciable Asset due 
to wear and tear, passage of time, change of technology etc.  
 It is charged every year and deducted from book value of 
depreciable asset to calculate the value of depreciable asset which 
to be shown in Balance sheet.  
CA PARDEEP MAKKAR FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 2 
 
? Depreciation is a non-cash expenditure. 
? Land is never depreciated. 
? Current Assets are never depreciated instead valued.  
 
CA PARDEEP MAKKAR 
 
FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 3 
DEPRECIATION  ACCOUNTING 
Important Note:- 
e(i) are expected to be used during more than one accounting period;    
and 
  (ii) have a limited useful life ; and 
  (iii) are held by an enterprise for use in the production or supply of 
goods and services for rental to others or for administrative purposes 
and not for the purpose of sale in the ordinary  course of business. 
 
CA PARDEEP MAKKAR 
 
FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 4 
DEPRECIATION  ACCOUNTING 
Depreciable Assets are those which:- 
CA PARDEEP MAKKAR FACULTY AT THE INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA 5 
DEPRECIATION  ACCOUNTING 
Objectives of 
providing 
depreciation 
To ascertain true 
results of 
operations 
To present true and 
fair view of the 
financial position 
To accumulate funds 
for the replacement 
of assets 
To ascertain true 
cost of 
 production