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The main purpose of depreciation ???
And what are the accounting entries ???

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Apr 5 at 16:28:6
Muhammadbilal
Muhammadbilal
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by the way there 4 methods of depreciation

1 straight line
2 Reducing Blalance
3 units of production
4 sum of digits

but Commonly Organisations follow the method of Reducing balance & Straight Line.

and its also depends on the structure & the nature of the business.
Apr 12 at 12:2:44
Abdul
Abdul
141
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Depreciation is a depreciable amount of an asset reducing the value of an asset over time.
And it depends on the business that which method of depreciation they are adopting either
Reducing balance or straight line.

Explanation :

for example the business using the straight line method</qb> & the asset buy has value of 200,000 in 2010 & 15% depreciation we have to charge every month so the total depreciation at the end of 2011 would be 60,000 & asset remaining value would be 140,000.

calculation :

in 2010 asset cost : 200,000-30,000=170,000
in 2010 depreciation : (200000x15%) (30,000)

carryng value : 170,000-30,000=140,000
in 2011 depreciation : (200000x15%) (30,000)
in 2011 carrying value 140,000

Accounting Entries Would be in 2010

Depreciation 30,000 (debit)
Acc Depreciation 30,000 (credit)

Accounting Entries in 2011 Would be again same

Depreciation 30,000 (debit)
Acc Depreciation 30,000 (credit)
Apr 12 at 11:56:10
Abdul
Abdul
141

well asnwered bro...thxMuhammadbilal Hanif Apr 12 at 11:57:50

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