Commerce Exam  >  Commerce Notes  >  Accountancy Class 11  >  PPT : Depreciation Accounting - 2

PPT : Depreciation Accounting - 2 | Accountancy Class 11 - Commerce PDF Download

Download, print and study this document offline
Please wait while the PDF view is loading
 Page 1


Depreciation Accounting 
CPT Section A: Fundamentals of 
Accounting Chapter-5  
Part 2: Methods of Depreciation 
CA. Poonam Patni 
Page 2


Depreciation Accounting 
CPT Section A: Fundamentals of 
Accounting Chapter-5  
Part 2: Methods of Depreciation 
CA. Poonam Patni 
The Topics Already covered in Part 1 
Journal Entries for Depreciation 
Factors to be considered for Depreciation 
Objectives of Depreciation 
Causes of Depreciation 
Understand the Meaning & Need of Depreciation 
Page 3


Depreciation Accounting 
CPT Section A: Fundamentals of 
Accounting Chapter-5  
Part 2: Methods of Depreciation 
CA. Poonam Patni 
The Topics Already covered in Part 1 
Journal Entries for Depreciation 
Factors to be considered for Depreciation 
Objectives of Depreciation 
Causes of Depreciation 
Understand the Meaning & Need of Depreciation 
Learning Objectives 
SLM Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
WDV Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
SOYD Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
Page 4


Depreciation Accounting 
CPT Section A: Fundamentals of 
Accounting Chapter-5  
Part 2: Methods of Depreciation 
CA. Poonam Patni 
The Topics Already covered in Part 1 
Journal Entries for Depreciation 
Factors to be considered for Depreciation 
Objectives of Depreciation 
Causes of Depreciation 
Understand the Meaning & Need of Depreciation 
Learning Objectives 
SLM Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
WDV Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
SOYD Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
Methods for Providing Depreciation 
Straight Line Method 
Reducing Balance Method 
Sum of Years of Digits Method 
Annuity Method 
Sinking Fund Method 
Insurance Policy Method 
Machine Hour Method 
Production Unit Method 
Page 5


Depreciation Accounting 
CPT Section A: Fundamentals of 
Accounting Chapter-5  
Part 2: Methods of Depreciation 
CA. Poonam Patni 
The Topics Already covered in Part 1 
Journal Entries for Depreciation 
Factors to be considered for Depreciation 
Objectives of Depreciation 
Causes of Depreciation 
Understand the Meaning & Need of Depreciation 
Learning Objectives 
SLM Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
WDV Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
SOYD Method 
• Formula 
• Rationale 
• Advantages 
• Disadvantages 
• Journal Entry 
• Examples 
 
Methods for Providing Depreciation 
Straight Line Method 
Reducing Balance Method 
Sum of Years of Digits Method 
Annuity Method 
Sinking Fund Method 
Insurance Policy Method 
Machine Hour Method 
Production Unit Method 
Methods of Depreciation 
Formula 
Rationale 
Advantages 
Disadvantages 
Journal Entries 
Ledger 
Example 
Read More
82 videos|105 docs|42 tests

Up next

FAQs on PPT : Depreciation Accounting - 2 - Accountancy Class 11 - Commerce

1. What is depreciation accounting?
Ans. Depreciation accounting refers to the process of allocating the cost of a tangible asset over its useful life. It is used to account for the wear and tear, obsolescence, or other factors that cause a decrease in the value of an asset over time. This method helps businesses accurately reflect the decrease in value of their assets in their financial statements.
2. How is depreciation expense calculated?
Ans. Depreciation expense is calculated using various methods, such as the straight-line method, declining balance method, or units of production method. The most common method is the straight-line method, which divides the cost of the asset by its useful life to determine the annual depreciation expense. For example, if an asset costs $10,000 and has a useful life of 5 years, the annual depreciation expense would be $2,000 ($10,000 / 5).
3. Why is depreciation important in accounting?
Ans. Depreciation is important in accounting for several reasons. Firstly, it helps in accurately matching the cost of an asset with the revenue it generates over its useful life. Secondly, it allows businesses to allocate the cost of an asset over time, which helps in determining the true profitability of the business. Lastly, depreciation also helps in estimating the value of an asset for insurance or resale purposes.
4. What is the impact of depreciation on financial statements?
Ans. Depreciation has a significant impact on financial statements. It reduces the value of an asset on the balance sheet, which in turn decreases the overall net book value of the assets. This reduction in value affects the profitability of the business by increasing the depreciation expense on the income statement. Additionally, depreciation also affects the cash flow statement, as it is a non-cash expense that is added back to the net income during the calculation of operating cash flow.
5. Are there any tax benefits associated with depreciation?
Ans. Yes, there are tax benefits associated with depreciation. In many countries, businesses are allowed to deduct the depreciation expense from their taxable income, which reduces their tax liability. This deduction helps businesses in lowering their taxable income and ultimately paying less in taxes. However, it is important to note that there are specific rules and guidelines set by tax authorities regarding the calculation and deduction of depreciation for tax purposes.
82 videos|105 docs|42 tests
Download as PDF

Up next

Explore Courses for Commerce exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Related Searches

pdf

,

Sample Paper

,

PPT : Depreciation Accounting - 2 | Accountancy Class 11 - Commerce

,

Exam

,

Summary

,

practice quizzes

,

MCQs

,

Free

,

Semester Notes

,

ppt

,

study material

,

shortcuts and tricks

,

Important questions

,

video lectures

,

Extra Questions

,

PPT : Depreciation Accounting - 2 | Accountancy Class 11 - Commerce

,

Viva Questions

,

past year papers

,

Previous Year Questions with Solutions

,

Objective type Questions

,

PPT : Depreciation Accounting - 2 | Accountancy Class 11 - Commerce

,

mock tests for examination

;