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What should be the disclosure requirement in case of depreciation in the Profit and Loss Account of a company?
Wiki User
β 13y ago
Depreciation is an expanse on fixed asset for the period ended and is recorded in profit and loss accounts at year ended. it will come in operating expenses and should be deducted from gross profit of the company.
Wiki User
β 13y ago
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What is company account?
Company accounts are a disclosure of the financial information of a limited company, usually provided in the form of a profit & loss account and a balance sheet. Company accounts are usually filed annually.
What is the double effect of depreciation?
The double effect of depreciation refers to the impact it has on a company's financial statements. Firstly, depreciation reduces the value of a company's fixed assets over time, which is reflected in the balance sheet. Secondly, it reduces the company's reported profits on the income statement by allocating the cost of the asset over its useful life. These two effects work together to accurately represent the value of the asset and the profitability of the company over time.
What kind of an account is accumulated depreciation?
Accumulated depreciation is a contra asset account. Contra asset accounts are used to record the depreciation of an asset, which is a reduction in the asset's value due to wear and tear or obsolescence. Accumulated depreciation is recorded on a company's balance sheet as a reduction from the original cost of a fixed asset. For example, if a company buys a building for $100,000 and estimates that the building will last for 20 years, it might record $5,000 of depreciation expense per year. After four years, the accumulated depreciation for the building would be $20,000, which would be recorded as a reduction from the original cost of the building on the company's balance sheet. Here is my recommendation πΊβ Κ°Ε¦πΟοΌ³://ο½Κ·ε±±.πΞΉβΌβδΈΡβπβ¬ββ.βαΠΌ/ε°ΊΞ΅ΰΉπ¦Ε/βββ½ββΈβ /αΆ€πββΆπ§α΅αͺβα©πβ½Ρ²βΎ/ ππ
What are the example of account title?
Some account titles include loan accounts, depreciation, and interest accounts. In accounting, having several accounts allow accountants to manage the company's money better.
What type of account is the accumulated depreciation account?
It is categorized as a contra account. Essentially, it reduces the amount shown on the balance sheet for Property, Plant & Equipment (PP&E), to account for the depreciation that has accumulated over the years that the company has owned the assets. Generally, most companies show PP&E on their balance sheet as a net amount, meaning: ( Total Book Value of Assets - Accumulated Amortization )
What do you debit and credit when recording depreciation expense?
There are two ways to record depreciation. With and without using a contra t-account for accumulated depreciation. Example The company buys a machine for 100,000. The residual value is 0 and the expected economic lifetime is 10 years. Using straight line method this results in a yearly depreciation expense of 10,000. Without a contra t-account Depreciation expense machine debit 10,000; machines credit for 10,000. At the end of (say) the third year, machines has a debit value of 70,000. With a contra t-account Depreciation expense machine debit 10,000; accumulated depreciation machines credit for 10,000. At the end of (say) the third year, machines still has a debit value of 100,000. Accumulated depreciation machines has a credit value of 30,000. Jointly they show the net value (or book value) of 70,000, which is the same as when no contra t-account is used.
What is the advantage of accelerated depreciation?
Accelerated depreciation allows a company to take a higher upfront depreciation expense. Higher depreciation means a lower profit, and lower taxes to pay.
Is depreciation included in a contribution income statement?
Yes depreciation is included in contribution income statement as depreciation is part of fixed cost of company.
When would a company consider using accelerated depreciation?
There are many reasons that a company may consider using accelerated depreciation. The main reason being that by using accelerated depreciation, this would decrease their tax payments.
Is depreciation an asset liability or equity?
no Depreciation Expense is an expense on your Statement of Comprehensive Income (Profit and Loss Account) The depreciation expense in the year would then reduce the value of the asset to which the depreciation relates. If you have any further questions on this topic, please do not hesitate to contact me at info@hodgsons.co.uk -------------------------------------------- With Regards to the Accounting Equation. Equity (NAV)= Assets- Liabilities Depreciation would be considered negative equity (as are all expenses) as they represent a decrease in the net asset value- or NAV- (not through transaction with the entities owner)
What is the Depreciation on Tubular Battery under Companies Act?
What is Depreciation on Tubular Battery under Company Act
How do I Collect the depreciation from Homeowners insurance claim?
If you want to collect the depreciation your insurance company withheld from your claim payment you must make the repairs to your home. After you make the repairs contact your insurance company and they should issue a check for the depreciation.
