Unit-20 Depriciation-I
In this unit we shall have a detailed discussion on depreciation and study the basic factors influencing the amount of depreciation.
Describe the methods of recording depreciation in books of account. How is the balance of Provisions for Depreciation Account shown in the Balance Sheet?
< Back To All Answers
Answer
{{currentAnswer.user.userName}}
Learning Pundits Content Team
There are essentially two methods of recording depreciation in the books of account:
(1)When Provision for Depreciation Account is maintained.
(2)When Provision for Depreciation Account is not maintained.
Under the first method, the amount of depreciation is credited to the 'Provision for Depreciation Account' every year and the concerned asset account continues to appear at its original cost. Of course, while preparing the Balance Sheet, the accumulated balance of the Provision for Depreciation Account is shown by way of deduction from the cost of the asset.
Under the second method, no Provision for Depreciation Account is opened. The amount of depreciation is directly credited to the concerned asset account every Year. The asset account would thus appear in books at the depreciated value (written down value). Of course, it will be shown in the Balance Sheet giving the details of the opening balance, purchase and sale of the asset, and the depreciation provided during the year.
