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What is provision for depreciation and how do you treat it in accounts?
Wiki User
∙ 9y ago
A provision of depreciation account is different than other accounts because it collects all of the value of depreciation within the account. In the main asset account, depreciation is not credited because it is credited into this account.
Wiki User
∙ 9y ago
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What is provision for depreciation?
Provision of depreciation account is the account of provision of depreciation.First of all we should understand provision of depreciation .Provision of depreciation is the collected value of all depreciation. With making of this account we are not credited depreciation in asset account. But transfer every year depreciation to provision of depreciation account. Every year we adopt this procedure and when assets are sold we will transfer sold assets 'total depreciation to credit side of asset account. For calculating correct profit or loss on fixed asset. This provision uses with any method of calculating depreciation.
Provision for depreciation is equal to accumulated depreciation?
yes
What is provision of depreciation?
Provision of depreciation is allowance account in which every year fixed amount is put to charged against actual depreciation so that planned income statement can be prepared and profit remains smooth.
Is provision for depreciation is current liability?
NO, it is not a liability it is a con-tra account
Should Provision for depreciation comes under current liabilities?
All provisions comes under current liabilities so provision for depreciation is as well because it is made for one fiscal year only.
What are the examples of contra account?
Examples of Contra Accounts are Accumulated Depreciation and Provision for Doubtful Debts
What is provision for depreciation?
Provision of depreciation account is the account of provision of depreciation.First of all we should understand provision of depreciation .Provision of depreciation is the collected value of all depreciation. With making of this account we are not credited depreciation in asset account. But transfer every year depreciation to provision of depreciation account. Every year we adopt this procedure and when assets are sold we will transfer sold assets 'total depreciation to credit side of asset account. For calculating correct profit or loss on fixed asset. This provision uses with any method of calculating depreciation.
Provision for depreciation is equal to accumulated depreciation?
yes
Do you credit provision depreciation and debit accumulated depreciation?
yes
What is provision of depreciation?
Provision of depreciation is allowance account in which every year fixed amount is put to charged against actual depreciation so that planned income statement can be prepared and profit remains smooth.
Is balance of provision for depreciation account is shown on the trial balance as debit?
no, provision of depreciation iscredit in nature. And thus it should be shown at the credit side at trial balance.
Is provision for depreciation is current liability?
NO, it is not a liability it is a con-tra account
Should Provision for depreciation comes under current liabilities?
All provisions comes under current liabilities so provision for depreciation is as well because it is made for one fiscal year only.
Accumulate depreciation accounts are liability accounts?
FALSE, It's a contra-asset
When a company records depreciation it debits?
debits expense accounts and credits contra accounts
What accounts will be closed by debiting the Income Summary?
Depreciation Expense
What would a permanent accounts include accumulated depreciation?
yes
