Day: December 27, 2021

The assessment of depreciation and the amount to be charged in respect thereof in an accounting period are usually based on the following three factors :  historical cost or other amount substituted for the historical cost of the depreciable asset Read More …

There are several methods of allocating depreciation over the useful life of the assets. Those most commonly employed in industrial and commercial enterprises are the straightline method and the reducing balance method. Under the Straight Line Method, an equal amount Read More …

In terms of the decision in the case Lee v. Neuchatel Asphalte Co. Ltd. (1889), there does not appear any necessity to provide depreciation on wasting assets like mines, quarries, etc. In the present-day context, however, it is highly doubtful Read More …

To keep capital intact : It will be evident that one of the effects of providing for depreciation on an asset is to retain in the business out of the profits in each year, an amount equal to the proportion Read More …

Definition of Depreciation Accounting Standard 6 issued by the Institute of Chartered Accountants of India on “Depreciation Accounting” defines depreciation as follows: “Depreciation is a measure of the wearing out, consumption or other loss of value of a depreciable asset Read More …

An expenditure, the benefits of which is immediately say within one year expended or exhausted in the process of earning revenue., eg., on purchase of goods for sale, on their movement from one place to another, on maintaining assets, on Read More …

A capital expenditure is that which is incurred for the undermentioned purposes:  Acquiring fixed assets, i.e., assets of a permanent or a semi-permanent nature, which are held not for resale but for use with a view to earning profits.  Making Read More …