Depreciation and disposal of fixed assets

Recommendations of Choksi Committee on Depreciation

1. Depreciation under the Income Tax Act does not merely a provision for charging against taxable profits the capital expenditure incurred by an undertaking on the depreciable asset over the useful lives of the assets, but it is also aimed at working as a tax incentive measure affecting the cash flow of business enterprises and …

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Sinking Fund Method of Assets Depreciation

This method is known by different names such as Redemption Fund Method, Amortization Fund Method, Sinking Fund Method of Assets Depreciation. It requires the depreciation on the asset to be provided through a depreciation or Sinking Fund brought into being by accumulating thereon the amount of depreciation at a flat rate charged to the profit …

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Accounting treatment of depreciation

Explanation Once depreciation has been calculated using an appropriate method, it must be brought to books. As stated earlier, the accounting entries for depreciation are generally made at the end of each financial year. A new account called depreciation account, or more appropriately depreciation expense account, is opened in the books. This account is debited …

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Provision for depreciation account

Explanation The use of a provision for depreciation account is an improvement over the accounting treatment of depreciation discussed on “accounting treatment of depreciation” page. This account is used to accumulate depreciation that is provided against a fixed asset. If a provision for depreciation account is used, the accounting entries are made as follows: One …

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Depreciation – MCQs

Take a quick Multiple Choice Questions (MCQs) test about Depreciation. These MCQs can help you to prepare for your exams, interviews and different tests. Just click the “start quiz” button and start Depreciation MCQs quiz. If you find difficulty in answering these questions, read ‘Depreciation‘ chapter thoroughly from explanation section of the website. You may …

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